ES Formally Enters Bear Market Then Rallies, More Ahead? May 13th Chart
In yesterdays newsletter, after ES lost 3945 support, I was looking for a selloff down to 3910, then 3830. We got to 3850 today (with the typical, messy back and forth back-testing we’ve had daily lately) then rallied into close. This was about 20 points shy of my support but this level was no coincidence: It just so happens that this zone marks the 20% off from All Time Highs formal definition of a bear market, and today the S&P crossed into a bear market by approximately one tick before surging.
It has a history of respecting this strange 20% down figure, and on Christmas eve 2018 ES crossed into a bear market for about half an hour at 20% down before bottoming and rallying 45% over the coming weeks and months.
We ended today with nearly everyone looking for a “low” and relief bounce, but this market remains extremely challenging and full of traps. Here’s what I think plays out