Pullback For SPX - Will The Dip Get Bought As Usual? May 24th Plan
After a 105 point breakout rally last week where ES exploded out of the tightest base since April 2017 (and more broadly, a 160 point rally since the May 4th low), ES put in its first major post-breakout selloff today.
Why did we get a dip today? Besides normal corrective action after a trend move, I wrote yesterday how ES had built a clean, symmetrical triangle pattern since Friday, with 4195 support. I wrote yesterday: “Bear case tomorrow: Quite simple and starts on the fail of 4195” and “If 4197 fails, the triangle breaks down and we could go into free fall”. Free fall it was, and we got a sharp pullback.
Since May though, and broadly since October 2022, ES has been in a strong, durable uptrend with every dip being bought. Most acutely, since March ES has only put in consecutive red days on 5 occasions. Will the dip get bought? In today’s newsletter, I’ll be addressing this, talking how I traded todays messy action via my system (the good, the bad, and the ugly) and provide the actionable trade plan for tomorrow.