Dead Cat Bounce For SPX, Or Bottom? April 17th Plan
My newsletter yesterday was entitled: “The Largest Sell Of 2024 Continues. Relief Bounce Incoming?”, the answer, was yes, sort of. As discussed yesterday, ES has been in the midst of its largest pullback phase of 2024 so far, with ES on Friday putting in its second largest red day of the year, and following it up yesterday, putting in the largest two back-to-back red days since the Jan 2nd and 3rd dip that kicked off the 2024 year. The most recent leg of this selloff yesterday had a fairly obvious technical cause.
I wrote on Sunday: “Bear case Monday: I view bears as having the ball now until proven otherwise…For Monday, I’d see continuation of the bear case below 5163..After this, I’d consider shorts perhaps 5158 for a move down the levels.”. This 5160 area had been a major trendline support dating back to mid-Feb as readers know, and we broke it, triggerered shorts, and flushed 80+ points. After this flush, I concluded my newsletter yesterday by writing: “My general lean if I had to throw one out is that ES can attempt to back-test today’s breakdown zones. This would be 5136+”. We were in a highly choppy market today, and only got to 5120+ on this bounce before fading.
Is there more bounce coming on this? In today’s newsletter I’ll talk this, I’ll do a deep dive on the short setup yesterday that triggered the 80+ point flush (it is the rarest, most difficult, but highest R/R of my three setup types). Finally, I’ll discuss the actionable trade plan for tomorrow.