Largest 1-Day Sell For SPX Since Mid-April, Will The Dip Be Bought? August 3rd Plan
The last newsletter was entitled: “Will August Be Seasonally Bearish For SPX? August 2nd Plan” where I discussed seasonality and this title could not have been more timely because 1.5hrs after the newsletter was sent out - and after 2.5 days of chop essentially in a 20 point range - volatility was finally unleashed at the 6pm futures open last night and ES put in the most eventful evening session possibly of 2023, followed by more daytime volatility.
Why did volatility and actionable selling suddenly begin? The associated news catalyst was US credit downgrade, which finally triggered what always starts sustained, actionable selling - the loss of a critical multi-day support. This was the much awaited “bear trigger”. I wrote yesterday: “Bear case tomorrow: Begins on the fail of 4592-89….If 4589 fails, its short to 4570-73, bounce, then probably lower down to 4550”. This is *precisely* what played out overnight and ES sold to 4572, bounced back to 4589 to back-test it, then sold down to ~4550, which bounced overnight then failed day-time
August - while young - has certainly seen a character change to July. Where will the first relief bounce be? In today’s newsletter, I’ll discuss this, I’ll then break down some of the quality setups we got overnight/today as per my methodology, and I’ll then discuss the actionable trade plan for tomorrow.