Is the Pullback Really Already Over For SPX? May 27/28 Plan
NOTE: This is a resend of the newsletter for Monday [holiday session] and Tuesday May 27th/28th, originally sent out at 4pm on Friday, for those who did not receive.
Yesterday, ES put in its largest red day since April 30th and this was the first proper dip after a historic rally sequence that not only saw 10 green days in a row at one point, but only saw 3 red days for the entirety of May. As I have discussed since the start of the month though, that ES remains in a buy dip regime, and it should come as no surprise to readers of this newsletter that this dip was bought, and more importantly, where.
I wrote on Wednesday: “5273: This was rough resistance from May 10th to May 13th, and we broke it out, commencing the leg up after CPI… This is the first major downside backtest”. I also wrote: “5273 would be a spot I’d be interested in trying longs. As long as ES holds 5265-72, we can bounce to 5294, 5302, then 5317-22”. It could not get cleaner than this, because yesterday we sold down to 5273 low of day exactly, and then today, rallied to 5322+, where we spent the day basing.
The question now though, is where does that leave us? Is the dip really done already? For all the excitement, we are around the same spot we were when started the week. In today’s newsletter I’ll talk this, I’ll go over my rarest setup type (the breakdown short) which triggered a rare short yesterday into 5272. Finally, I’ll talk the actionable trade plan for Monday/Tuesday.