Is The Bottom In For SPX? Not So Fast. April 12 Plan
My newsletter yesterday was entitled: “Will Today’s Dip Get Bought Like The Others?”. The answer was, yes. April has been a month of “Deja Vu”. Since the start of the month, we have had three sharp, rapid, sudden dips, between 50 and 115 points. These dips - the most recent of which was after CPI yesterday - have shared common traits. Firstly, they have been short and violent, usually playing out in an hour or two (or in yesterdays case, 10 minutes). Secondly, the dips get bought, usually retracing all, or nearly all of the sell within a few days. This action has prevented ES from putting in consecutive red days, and we saw it today.
This continues with the broad “buy all dips” regime that has been in play all year, where every 2 or 3 day dip gets snapped up I wrote yesterday: “Generally though, the bull case for tomorrow would see 5191 continue to defend with any spikes below to 5184 quickly bought up…My general lean is as long as 5191 keeps hold, we can back-test some of today’s breakdown zones. This would look like popping back to 5220, 5230, 5243-45”. We saw exactly this today around 5191, and as a failed breakdown day-trader, this was a dream market. At 945AM, we dipped to 5184, reclaimed 5191 and longs were triggered to 5243-45 target and we find ourselves right here at the close.
The question is, now what? Did we put in a bottom, or is another sharp dip ahead yet again? In today’s newsletter, I’ll talk this. I’ll then do a deep dive into a critical variation of my core setup (the failed breakdown) which we saw after CPI yesterday. This is important to know. Finally, I’ll discuss the actionable trade plan for tomorrow