Is The Bottom In For SPX, Or Is This Another Dead Cat? April 24 Plan

Today’s price action in ES could have not have played out more perfectly. I concluded my newsletter yesterday by writing the following: “My general lean is as long as 5040 defends (or recovers quickly on any losses), ES can squeeze a little more out of this recovery leg to 5081, then 5102”. In accordance with this, I added longs at the close yesterday, writing: “I have added exposure back here into the close ~5044”. Overnight, and into today, we saw exactly this. We held ~5040, and rallied to 5081 before 10am today. We then pushed up into 5102 zone by 11am, then based there for hours and cleared it.

This relief rally should not come as a big shock though, given the magnitude of the selling heading into. I entitled my newsletter yesterday: “SPX Snaps Its Largest Red Day Streak Since 2022. More Green Ahead?” and this red streak of course refers to the fact that prior to Monday, ES had sold an incredible 6 red days in a row, something that had not happened since September 2022. These 6 red days in a row were part of a greater three weeks in a row of selling, something we had not seen since September 2023.

This (along with the technical factors discussed in my Sunday newsletter) are why I was looking for a relief bounce to start this week. The question is, can bulls sustain it? In today’s newsletter I’ll talk this, I’ll do a deep dive into the setup that ultimately triggered this rally (hint: Its the same one that causes most rallies), and then discuss the actionable trade plan for tomorrow.