Multi-Month Breakdown For SPX. Is It A Trap? October 4th Plan

The last week has been entirely about one single trendline, and I have talked about it at length. This is of course the core rising trendline from October 2022’s bull market lows, running through March 2023s lows which was located 4290-4300. It shows the power of a single trendline and one could have done well trading this week with only that line drawn.

Last Wednesday, we tested it the first time, and rallied 70+ points. Yesterday, we tested it for a second time, and rallied 35 points. I wrote in yesterdays newsletter: “This means that on any further tests, it is now more vulnerable to a sustained breakdown”. Today, we tested it for a third time, and down it went, triggering shorts. I wrote yesterday: “I’ll be getting short high 4280s for the next major leg down” and we printed high 4280s this morning and saw a good flush lower down to 4254-58 major support.

Now what? ES just broke down a 11 month trendline - but critically - after already selling 400 points from August highs. Is it a trap? In today’s newsletter I’ll talk this, breakdown the setups that lead into yesterdays final bounce/todays crash, then talk the actionable trade plan for tomorrow.