Major Breakdown For SPX - Will The Dip Get Bought? September 7th Plan

In this newsletter and on Twitter, I’ve talked for months (and even more in the last week) about how one level is critical in ES: 4493-87 and this has been a battleground level since early June. Significant highs were set there in June and early July, which then broke on July 12th to trigger the July melt-up. It then failed in August, triggering the 130 point late August melt-down, before reclaiming late month. Today, it lost yet again, and ES immediately went into a one directional, relentless selloff.

This was after two days of grinding/difficult chop. I concluded my newsletter yesterday with the following: “If 4487 fails, that means the base has broken down, and implies ES will need to retrace a large chunk of the late August rally”…adding “Bear case tomorrow: Easy and starts on the fail of 4487…I’ll be getting short 4484 or so, and I like this short quite abit. Level to level profit takes, as always, but I’d be gunning for mid 4460s at least”. This is precisely what happened after we lost 4487 and hit the 4487 short trigger, it was elevator down, and we got that that sell to “mid 4460s, at least”.

Today, we retraced rapidly about half of the late August rally, then bounced late day. Is that it for the sell or is more incoming? In today’s newsletter I’ll talk this, I’ll then breakdown the sequence that lead into today’s short and how I traded it via yesterdays plan (the good, the bad, and ugly). I’ll then provide the actionable trade plan for tomorrow.