Incredible 7 of the Last 8 Days Red For SPX. Relief Bounce Time? Oct 27th Plan
My newsletter yesterday was entitled: “6 of Last 7 Red Days For SPX, More Red Incoming?” and the answer turned out to be yes and we spent 3/4 of today in relentless sell mode. Last week was the longest stretch of consecutive red days in 2023, putting in a substantial 5 red days in a row for the first time this year. This week started off with a single green day representing a 70 point bounce to reset after 5 days. Bulls had to hold above 4245 yesterday to have a hope of this continuing, and they dropped the ball.
In my Tuesday newsletter, I wrote: “Bear Case Tomorrow: 4245 needs to fail” and as soon as we printed below 4245 yesterday, it was “elevator down” for essentially 100 points. I added yesterday: “Bull case tomorrow: There is no bull case until bulls do something to prove there is one. For tomorrow, this means reclaiming 4220 to start” and after a quick pop to 4220 after Meta earnings yesterday, bulls rejected at 4220 and we saw yet another day of selling.
Today was 7 of the last 8 days red, but late day ES finally put in another relief bounce attempt. Is this bounce yet another dead cat, or a sustained recovery leg beginning? In today’s newsletter I’ll talk this, I’ll then talk about what sets up short squeezes (which can result in multi-hundred point rallies), then go over the actionable trade plan for tomorrow.