Largest Red Day of 2024 For SPX; What Now? April 15th Plan
Yesterdays session concluded with a very strong rally that took us +80 points to 5250s by the close. I concluded my newsletter yesterday, by writing: “Is The Bottom In For SPX? Not So Fast. April 12 Plan”. Not so fast was probably an understatement, as we retraced the entire move today, and then some. I wrote yesterday that April has had a “theme” to it, in the sense that 4x this month now, we have seen rapid, sudden dips lower. These dips have all been similar: They are typically 50-100 points, they melt through multiple supports, and they have generally been short lived, usually playing out in a couple hours (after CPI Tuesday, it was in 15 minutes). Then, they get bought and retraced. Today though, dip buyers were absent, with ES driven lower on geopolitical concerns all day.
Yesterday, I was looking for a run to 5245ish, writing on Wednesday: “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 tested 5184 yesterday, squeezed to 5245 target, spent the night basing there, then this morning, the melt-down began. I wrote yesterday: “Bear case tomorow: ….5192 needs to fail though to see any attempt at sustained downside”. This morning, we found ourselves at ~5192 again, and after a final bounce attempt, we flushed.
This in turn produced the largest red day of 2024 so far, taking us back to where we were roughly a month ago. Where do we go from here? In today’s newsletter, I’ll talk this, I’ll go over my approach to trading these types of sessions (which I call “knife catch days”). Finally, I’ll discuss the actionable trade plan for tomorrow.