The Biggest Red Day Since April 30th For SPX: More Ahead? May 24 Plan

After a very slow few days, Nvidia earnings yesterday woke ES back up. For the last week - after a historic 10 green day in a row rally (longest green stretch since 2021) - we have been building out a flag mostly between 5311-5347 as market was waiting on a catalyst to move, and Nvidia delivered.

I sent out the newsletter early yesterday at 3:25PM, indicating I had added long prior to Nvidia earnings, writing: “I have added 25% long exposure back~5314 seeing the defense off range support and will hold into earnings”. I also wrote: “5311-5347 is the range. Bulls need to hold/recover 5311 on any data reactions to keep the upside breakout live which would target a trip back to range resistance at 5345, then if bulls can do it, 5361, 5375, then 5397+”. After earnings, we dipped to 5311, then broke out the range getting to 5361 target and a little beyond.

However, after being green for 14 of the last 16 days, ES finally ran out of steam, and was unable to sustain this breakout beyond that 5361 level, and we collapsed. I wrote yesterday: “It should go without saying that in these conditions, sells can come anytime and they usually come very rapidly when they do. This should be a not be a surprise to anyone if it happens now”. This multi-day range breakout failed, and ES finally put in a proper red day; largest since April 30th.

Is it the start of more to come? In today’s newsletter I’ll talk this, I’ll go over the sequence of setups that got me long for what turned out to be a 60 point rally overnight. Finally, I’ll talk the actionable trade plan for tomorrow.