Second Biggest Red Day of 2024 for SPX. Now What? April 5th Plan
My newsletter yesterday was entitled “The Dip Was Bought In SPX. Dead Cat, or Bottom?”. The answer was (very definitively), dead cat with a strong late day melt-down. However, it did not occur without paying bulls nicely first. On Tuesday, traders got a lesson is just how powerful simple techinical analysis can be to cut through the enormous barrage of noise out there. What am I referring to? On Monday (before the deep selloff), I wrote: “Bull case tomorrow: I will say the same thing I say everyday. Bulls fully control above 5243-46 triangle resistance. We could dip down there, and it is a normal, regular back-test”
On Tuesday, we got exactly this: We got a sharp selloff down to 5243, triggering longs, we then spent most of Tuesday and part of yesterday revisiting this zone, before bulls resumed to the upside today to 5300+ target. This 5243 area was a simple back-test of the FOMC breakout area from March 20th. Again, no complex macro analysis was required to exploit this. Just a simple, well drawn trendline. I concluded my newsletter yesterday by writing: “My general lean for tomorrow is unchanged. As long as 5241-35 keeps holding (and if bulls are really motivated, we won’t lose 5257)…From there, work up to 5285, 5298-5302”. We got this today, and made it to 5302 by the open where we spent most the day. From here, things got very interesting, and we saw a violent, news-driven extreme afternoon melt-down, that took us back to the low 5200s in short order.
I wrote yesterday: “Above there, 5298-5302 is another good level to catch some points short for those who like these”. For those who took this, it was certainly more than “a few points” with ES selling off 100+ points in a 2 hour window. Where does this leave us though? In today’s newsletter I’ll talk this, I’ll then do a deep dive into the setup that caused this final rally leg (its a setup you will see over and over, daily). I’ll then discuss the plan for tomorrow.