Is SPX Getting Close To Capitulation? October 30th Plan
The incredible red streak continues in ES, not only was the week evidently red, but ES has now put in an extremely rare 8 of the last 9 days red, with the sole green day being Tuesday this week. What “caused” this selling? As I discussed all week, Wednesday was a very significant day in technical terms, not only did we lose the 4245 level which had been support in the first part of the week and initially triggered shorts, but ES also lost its core bull market trendline from the 2020 COVID lows, which was located at 4220.
Since then, ES has been in “sell the bounce” mode, with periods of basing interspersed by sharp sells lower for a total of 100 points down since the loss of this level on Wednesday. I wrote in my last newsletter: “Bear case tomorrow: Begins on the fail of 4153… Generally speaking though, after another bounce at 4153 or quick failed breakdown to drain support and accept the level, I’d be looking short perhaps 4146 for a move down”. Bulls tried for 24hrs to defend 4153, before finally tagging that 4146 short trigger and flushing late day today.
While we are now 2 red weeks in a row and 8 of 9 red - and everyone knows ES is extreme oversold. Are we close to capitulation? In today’s newsletter I’ll talk triggers for this, break down the setup that caused the recent heavy selling, then provide the actionable trade plan for Monday.