Did Bulls Just Drop The Ball In SPX? May 2nd Plan

As discussed yesterday, after an incredibly bearish start to April (where we put in 6 red days in a row for the first time since Sept 2022), the back half of April saw a fully expected relief bounce and return to “buy the dip” where we rallied 195 points, and every dip - some larger than others - was bought. Yesterday, we got the latest of these dips. I wrote yesterday: “Bear case tomorrow: Begins on the fail of 5121… I’d look short perhaps 5115” and we broke down a three day base, and began a 90 point flush. Today bulls tried to buy that dip, and succeeded for an 85 point bounce, before retracing it by the close to end flat.

I concluded yesterdays newsletter by writing the following: “My general lean though is that as long as ES can hold 5043 (5030 lowest) on any FOMC spikes down, that we can continue bottoming out the RSI, then rally back to 5102, then onto 5136-46 again”. This played out nearly to perfection today and ES certainly agreed with that 5043 level, testing it an incredible 6 times just in today’s session alone to trigger longs, before finally getting that massive squeeze, making it to 5102 target and beyond (5127 high of day), before a late day hard flush right back to that 5043 zone again.

Did bulls drop the ball? Or are we just setting up to try higher again tomorrow? In today’s newsletter I’ll talk this, go over two textbook examples of two of my core setups that have occurred in the past two days (including one which triggered todays 85 point squeeze), then discuss the actionable trade plan for tomorrow.