Major Squeeze in SPX, Is It A Dead Cat Bounce, Or Bottom? Feb 15 Plan

Yesterday saw the single biggest one day sell of 2024 (if measured from high to low). The core theme of 2024 so far, however, has been “all dips are bought” and this dip was no different. It is no coincidence whatsoever either, where yesterdays dip was bought. Every single day for the past month, I have talked about the ~4933 level being the “single most important level in ES” because it back-tests a large, month long megaphone pattern we broke out in January.

Yesterday, we back-tested this (4936 low of day), and went into a violent short squeeze for 85 points. This back-test was a long trigger as provided to readers, and turned into one of the best longs of 2024 so far. I was holding this long into today, writing yesterday: “I am holding small long runner exposure still from the entry mentioned above”. I added yesterday: “If I had to give a lean here, it is that we can dip/base out below 4969-71, then try to work up the levels to 4990, 5018 to get the back-test. *This quite literally could not have played out better*. Overnight, we based out below 4969-71, then got the run back to 4990 by morning, and came to 5018 right by the close.

We put in a 85 point rally just in the last 24hrs. Is it a dead cat bounce, or is the low in? In todays newsletter I’ll talk this, I’ll then do a deep dive into the rarest of my three setup types (the breakdown) which caused yesterdays hard flush. I’ll then conclude by providing my actionable trade plan for tomorrow.