Every Bounce Is Sold; More Ahead Next Week? September 6th Trade Plan
After the Aug 26th multi-week head and shoulders breakdown at 4120, what happened last week wasn’t surprising: We had a pure “sell the bounce” week, where ES was unable to sustain any bounces for more than a 24hr period without re-visiting the lows. In technical analysis, a “buy the dip” market (which we had from June low), switches to a “sell the bounce” market when a pattern breaks down, and this happened on August 26th. The bounces will vary in size, shape, intensity but until something changes technically, will remain the case.
This was certainly the case Friday. In my last newsletter, I wrote: “I am holding long here and my lean is we make our way to 3985 then to 4025-35 then try a sell again”. This played out extremely well - we rallied to 3985, then set a high at ~4020 before a 100 point selloff.
Monday is a short-trading day for futures (and day off for the NYSE), but on Tuesday summer trading volume ends and more regular markets commence. Things could get complex - In today’s newsletter, I’m going to go over how I traded Friday’s extreme swings, talk the big picture targets into September, then talk what triggers bears need to watch to not get short squeezed next week.