Sell The Bounce Remains The Theme As We Start Bearish September: Sept 1st Plan

In yesterdays newsletter, I talked about how we could see some chop to start the day, but “My lean is we test 4020-30 the reject to those targets”. This general plan played out well as we tested 4018.25 then spent the day chopping and base building, ultimately rejecting towards the lows to finish up the day.

Last Friday was a very important inflection point in the markets, as ES broke down a 3 week, classic head and shoulders pattern at 4120. This formally ended the rally from June, beginning a corrective “sell the bounce” leg and three days out from the breakdown, that’s what we’ve seen everyday. The timing couldn’t be better, as we enter the most bearish month of the year *on average*

Despite this though, there will still be big, multi-day rallies. In todays newsletter I’ll be talking about how I traded today’s consolidation as per yesterdays (and trading consolidations in general), talk about the inevitable short squeeze and trigger for it, then talk downside targets