Is Buy The Dip Temporarily Back In SPX? April 15 Plan
Its been a historic couple weeks of trading and as I’ve said for weeks now, when volatility and complexity spikes, its essential to simplify both your analysis, and your trading. Otherwise, its very easy to over-trade, FOMO trade, and get trapped. I simplify my trading by doubling down on my core edge: As readers know I am a Failed Breakdown trader, and the hyper volatile and down-trending conditions we have had for most this year are the most fertile grounds for Failed Breakdowns.
This may sound contradictory to new traders since Failed Breakdowns are a long setup, but one has to remember that the sharpest intraday longs occur not in clean uptrends like 2024, but volatile downtrends like 2025. This leads to the phenomenon that 7 of the 10 best days in the S&P 500 historically occurred within 15 days of the 10 worst days. In other words, when you have big sells, you get big squeezes and this means there is a powerful edge just focusing and waiting for those squeezes. Almost all squeezes are triggered by Failed Breakdowns.
We saw this last week, where we saw a 650 point short squeeze last Wednesday, one of the largest in history and I provided this setup to readers on Tuesday at 4pm (after selling 350 points), when I wrote: “4896 and may be the final support before ES makes a new low. I’ll be watching the reaction at this level. If its an organized sell into it, I may give it a bid, but if we are melting down on yet another trade war headline, let it flush perhaps down to 4875 and recover to attempt longs.” On Wednesday at 130AM, we hit 4875 exact, put in a Failed Breakdown of 4896, and squeezed 650 points. Short Squeeze. It remains the low to this day.
We saw a squeeze yet again on Friday. I wrote on Thursday at 4pm: “[My general lean] is that ES can defend 5248-52 and consolidate more 5340-5252. From there, we can retrace today’s sell with my target being 5377-80, then 5416, then 5468.” Friday morning at 10:30AM, we held 5248-52 exact - put in a Failed Breakdown of a low about an hour earlier- and rallied to 5416 which was the high of day Friday.
This week, I was looking for more upside stating on Friday: “My general lean based purely on technicals is that we continue up. 5428, 5484, then 5505-15 are initial targets and 5505-15 is a big test for bulls.” and we got to 5495 by this morning.
Since the Sunday April 6th low, dips are being bought in ES. Is buy the dip temporarily back? In today’s newsletter I’ll talk this, I’ll do a deep dive into some high quality Failed Breakdowns we had Thursday and Friday, including one we had on Thursday evening which set up the massive squeeze we had all Friday into today. Finally, I’ll discuss the actionable trade plan for tomorrow.