Bulls Drop The Ball In SPX, What Now? Feb 22nd Plan

My last newsletter was entitled “Major Inflection Point Here for SPX”: As readers know, the inflection point was the 4070 level, which was support of a 2+ week long bull flag structure. I wrote in my last newsletter that the fail of 4070 (and therefore, failure of the flag) “would trigger shorts and represent the failure of two bullish setups, which is turn is quite bearish.” This lost Monday overnight and made clear the type of day we were likely to start the week off with: Big to the downside.

I added on Friday “Bear case Monday/Tuesday: Begins on the fail of 4070 or so. Every dip below this level was bought today, and it is now quite weak. I’d likely try a short in the mid or low 4060s” and we continued a sell from that short trigger all day.. The question now though is, what does this mean?

While we had a major actionable sell today, it is still corrective inside the core multi-month uptrend. There are some major support tests incoming though. In todays newsletter, I will discuss these, talk my approach to identifying trend days like today, then provide the actionable trade plan for tomorrow.