The Biggest Red Day For SPX In 2 Months. More To Come? July 18 Plan
My newsletter yesterday was entitled: “Has SPX Begun A New Leg Up? Not So Fast”. Not so fast was correct, and after making a fresh new all time high yesterday afternoon and closing near the highs, ES began a substantial dip overnight and into the morning. This has been quite rare, being only the second red day now in the month of July, 2 red out of 13 green.
Why did we finally dip? Two reasons. Firstly, we hit a strong resistance. As readers know, I was long from Monday with 5723 target, writing at the Monday close: “Late day today, ES put in a failed breakdown. My general lean for tomorrow is always to defer to trend and this would mean popping up to 5698, perhaps dip then filling out the range more, then trying again for ATHs, with 5708, 5723 being targets”. We got to 5721 yesterday. Secondly though - as I always say - we never need to guess when a sell will come in ES. It comes whenever a major/critical support fails, after which, we can react short. We got this overnight last night, and I wrote yesterday at 4pm: “Bear case tomorrow:…There is also a breakdown short on the failure of 5694 available”. We lost this, and down we went for the biggest dip in two months.
I wrote yesterday: “Below there [5672], we flush hard and I am not touching longs until 5646 at least”. We spent nearly all day chopping here. Was today the start of more selling to come? In today’s newsletter I’ll talk this, I’ll discuss the “cause” of today’s sell in more detail, and then I’ll discuss the actionable trade plan for tomorrow.