Have Bears Lost Control In SPX? April 16 Plan

My newsletter yesterday was entitled: “Is Buy The Dip Temporarily Back In SPX”. The answer for today at least was yes. After selling 935 points in a 3 trading day window (essentially packing what would normally be the majority of a bear market into a 3 day span) ES has been in a buy dips mode of sorts since Sunday April 6th. Many of these dips were extreme including 365 points last Thursday, but they were bought to produce higher lows.

When people use the expression “buy dips” what typically is follows is “where?”. We don't need to predict that. Dips are bought and short squeezes occur when ES puts in my core setup: The Failed Breakdown, and every single day since the Sunday April 6th low ES saw at least one Failed Breakdown. This was true on Friday. I wrote Thursday at 4pm: “[My general lean is] that ES can defend 5248-52. From there, we can retrace today’s sell with my target being 5377-80, then 5416, then 5468.”. 5251 was the exact low on Friday from which we rallied to 5416 Friday high. This Friday morning 5251 low was immediately followed by a Failed Breakdown of a low at 5258 set a few hours earlier on Friday to trigger longs and off we went.

I was looking for this rally to extend to 5485+ yesterday writing on Friday at 4pm: “My general lean based purely on technicals is that we continue up. 5428, 5484, then 5505-15 are initial targets.” We got to 5484+ high yesterday before dipping again into the close yesterday.

Heading into today, dips were bought yet again. I wrote yesterday at 4pm: “ES has broadly been in a relief bounce now for a week. For tomorrow, ES is rangebound 5408 to 5469/5485. We could ping pong this, but my general lean is as long as support holds, the next leg up sees 5503, 5525, then 5558/65. If 5395 fails, we sell.” Today we ping ponged this range exactly. Right after newsletter was sent out last night we sold to 5408 range support, then by 10:30AM today, we rallied to 5485 range resistance before dipping.

Can the dip buys continue? In today's newsletter I'll talk this, I'll do a deep dive into the quality Failed Breakdown we had Friday to set the multi hundred point lows at 5250, and also discuss a more unorthodox setup we had yesterday (a variant of the Failed Breakdown called a level reclaim). Finally, I'll discuss the actionable trade plan for tomorrow.