Can Nvidia Earnings Break The "Sell Bounces" Streak For SPX? Feb 27 Plan

Last week ended and this week started with something rare: For the first time this year, ES put in 4 red days in a row marking the first proper correction of 2025. The began a sell last Friday (where ES also put in the first open-to-close downtrend day of 2025), was not random. As I’ve discussed at length, what I call ‘elevator down’ sells in ES begin when it loses a significant, previously heavily defended support shelf.

We saw this last Friday, where we lost the 6123-6116 support shelf that propped up price all last week. I wrote last Thursday at 4pm: “If 6123-6116 fails, 6098 is the absolute lowest bulls want to see, below which, we can collapse.” Collapse we did, and ES begin a four day correction, which was interspersed - as always - with multiple large short squeezes which were then sold.

Just like how sells in ES are caused by major support shelves failing, bounces/squeezes are caused when ES puts in my core setup: The Failed Breakdown (bear trap). On Monday at 4pm, I wrote: “5934 is below 5982. I like this level better particularly if we can put in a Failed Breakdown of the February 2nd multi-week low which at 5935 now.” Yesterday morning, we sold down to 5934, put in a big Failed Breakdown of the February 2nd multi-week low, and we were off to the races to 5996 by yesterdays close.

Today, I was looking for that momentum to continue a little higher, stating yesterday: “My general lean if I is that ES can try to recover the big 5988, 5996, 6004 resistance shelf. This would target 6020, 6042, then 6064-68+. If 5958-62 fails though, we need to see more downside again, back to today’s low at minimum.” By 11am, we got to 6020, and ES only had a one target run in it today, before dipping to 5958-62 support by 2pm.

ES remains in “sell bounces mode”. We get them, but they fade. Can Nvidia earnings at 420pm break the cycle? In today’s newsletter I’ll talk this, I’ll do a deep dive into the setup that caused yesterday mornings hard sell (my third setup type, the Breakdown Short) and yesterday/into todays violent squeeze (my core setup, the Failed Breakdown). Finally, I’ll discuss the actionable trade plan for Thursday.