Is SPX Gunning For Another Run At Its All Time High? Feb 5 Plan
I frequently talk in this newsletter about how price is composed of a series of repeating building blocks which drive the core moves. Our job as traders is not try to and capture every random intraday gyration, but to wait for the core building blocks to present, and this is where my core setup: The Failed Breakdown comes in. These building blocks are so repetitive that last week and this week were structurally identical.
Last Sunday Jan 23rd opened with a headline driven gap down from the 6120s (Deep Seek AI) and we sold 120 points. Readers know that after all deep sells, comes my core setup: The Failed Breakdown. We got it last Monday morning - of the prior weeks low. The obvious target was to fill that gap and I wrote last Monday at 4pm: “For now though, the bull case is that we got a short squeeze trigger on the Failed Breakdown of 5997 this morning at 8am, which triggered longs. The bull case ES can now begin back-testing with 6068-71 1st up. React there, then onto 6115-20 to fill the gap.” By last Friday we filled the gap, then sold into hard into Friday’s close.
Then this week? The exact same thing. We opened this Sunday with a 75 point “Trade War” gap down, creating a gap at 6056-66. We sold to 5940 on Sunday. From there, we put in my core setup: The Failed Breakdown, where we undercut last weeks low of 5949 and recovered. I wrote yesterday at 4pm: “If I had to give a lean it is always to defer to the immediate trend. This means as long as ES can flag out above 6004-08 or 6020 ideally, we can push to fully fill the opening gap to 6066.” By 6pm last night, we filled the gap to 6066 almost exact, then sold. We revisted it again today and spent the day.
There have been many “tape bombs”the past couple weeks, but they all get bought. Are we headed back to the highs? In today’s newsletter I’ll talk this, I’ll do a deep dive into the setup that caused yesterday squeeze (Failed Breakdown), and I’ll discuss the actionable trade plan for tomorrow.