Incredible 5 of 6 Days Red For SPX. Is Any Relief Coming For Bulls? September 27th Plan

Back in my newsletter on Friday, I spoke about the ultra-bearish confluence we found ourselves in starting early to mid-last week. The confluence of course being 1) The most bearish two weeks of the year seasonally in late September and 2) Last Wednesday (as discussed at massive length) ES broke down the only chart pattern that mattered - a huge triangle pattern built all summer, at 4472. Its been “sell the bounce” since. I wrote “the next two weeks are the most bearish of the year seasonally” and seasonals continue to track with a very high degree of precision.

There has been one very important magnet for this selloff: The 4335 level and this back-tests the zone we rallied out of 300+ points back in June. Yesterday, we tested it and put in a rare green day and good tradeable 45 point bounce, before revisiting today and this was revisit was (yet another) bad sign for bulls. I wrote yesterday: “The real bear case starts on the fail of 4335…. A higher risk short is at 4353” and today started off with bad news for bulls on both fronts, losing 4353 in the morning, then 4335 a little later on triggering yet another day of relentless downside. I wrote yesterday: “Below 4336, we sell to 4290-95” and we are almost there.

We are now red 5 of the 6 last trading days, and most importantly ES is near both its 200dma and its core bull market trendline from Oct 2022 lows. Is some relief coming for bulls? In today’s newsletter I’ll talk this, then I’ll break down the setups around 4335 that provoked yesterdays long and today’s selling. Finally, I’ll provide the actionable trade plan for tomorrow.