Short Squeeze In SPX: Dead Cat Bounce? Or Bottom? April 8 Plan
Note: This is a resend of the newsletter for Monday April 8th, originally sent out Friday 4pm, for those who did not receive.
Yesterday, ES put in the 2nd largest red day of 2024, but in terms of daily range, it was the largest single session sell of 2024 so far, by a respectable margin. Of course though, the defining “theme” of 2024 so far, regardless of the various sized dips we have had, is that ES is in what I have called a “dip buy regime”. These dips get bought, and I was looking for that to start the day today.
I wrote yesterday: “My general lean is that ES can try to put in a relief bounce. This would target 5212, then if bulls are aggressive, 5241”. ES wasted no time on this, and by 11am this morning, we got to 5241, then up to 5270s. I provided the long entry for this trade for readers yesterday by writing: “On short-term evening basis, if we can tag something like 5190 then reclaim 5196 I may also look long”. Yesterday evening, we diped to 5191, reclaimed 5196, triggering longs for what ended up being a 60+ point rally into today.
Was that it for the sell? In today’s newsletter, I’ll talk this, I’ll then discuss the setup that saw todays rally in more detail, and delve into an extremely important subject: The short squeeze. How to know when they are coming, and how to profit from them. If you don’t have mastery of the short squeeze, you’ll never many a net penny in an ES downtrend. I’ll conclude by discussing the actionable trade plan for tomorrow.