[Re-Send With Chart] Yesterdays Parabolic Melt-Up In SPX Was Sold. Is This Sell Just Another Dip To Buy? May 30 Plan

Note: The first send forgot the macro chart.

As readers know, I am a Failed Breakdown trader. I wait for price to flush lows, trap shorts, reverse, then I get in. This setup works because it tags along with institutional accumulation events, as institutions accumulate by finding liquidity pools (often under lows), waiting for price to sell into them (or sometimes, engineering the sell themselves), grabbing that liquidity, then reversing. Failed Breakdowns work in all conditions. They work best in volatile downtrends, but in uptrends they are obviously right at home as well.

And an uptrend we’ve been in. People are bored of hearing it now (and I’m bored of writing it) but every single day since April 6th - for two months nearly now - I’ve reminded readers of the broad regime that price is in: Buy Dips Regime. For nearly two months, the market has thrown headlines, data releases, and every type of catalyst at ES and there have been many dips (some quite large) but they get bought. Specifically, institutions buy them via Failed Breakdowns.

It’s what we saw right off the bat this Sunday. Last week ES saw 4 red days in a row including a massive 95 point trap down last Friday, and as a result, the subsequent rally was likely to be substantial. I wrote last Friday at 4pm: “In a strong bull case for Monday, ES won’t even head back to support of this range, and will rather just hold 5809 or 5794, recover 5815-20, then head back on up to 5843 then 5850…After 5850 recovers, 5877, 5900, then 5925 are the next big stops on the upside as we work back towards the highs.” On Sunday, Monday, and yesterday, we saw exactly this. Right on Sunday evening, we recovered 5815-20, longs triggered. We then rallied to 5850, cleared it, then ran to 5925+ target Tuesday.

Yesterday we spent basing out around that 5925 level and ES had its next big test: Nvidia earnings. Prior to Nvidia earnings, ES flushed down to 5893. This teed up the next bear trap/Failed Breakdown. I sent my newsletter out early at 2:45PM yesterday, stating: “My general lean is that ES can continue building out structure 5945-5910 and as long as 5910 holds (or traps below) 5945, 5957, then 5970-75 remain in play.” We trapped below 5910, sold to 5893, then by 420PM, Nvidia earnings hit, and we recovered it. We ran to 5970-75 target by 7pm last night, and beyond to 6k, before pulling back today to 5880s and rallying.

Will dip buyers step back in to buy today’s dip like all the others? They’ve already started trying. In today’s newsletter I’ll talk this, I’ll do a deep dive into three quality Failed Breakdowns we had this week (one Sunday to start the rally, one Tuesday, one Wednesday). We get roughly 1-2 per day, these were provided in advance. Finally, I’ll discuss the actionable trade plan for tomorrow.