The Biggest Red Week For SPX in 3 Months. More To Come? July 22 Plan
NOTE: This newsletter is for Monday July 22nd, originally sent out on Friday at 4pm, for those who did not receive.
This has been a unique week with ES putting in its first red week since June 24th, and the largest red week since April 15th. This came on the back of the largest two red day stretch since April 15th as well. As I’ve written at length, the fact ES decided to pullback this week (despite the thousands failed top calls from pundits over the recent 400+ point rally we had) was no coincidence.
Remember that trends continu, until a major fails to provide objective evidence that the trend is weakening. When ES loses a major support that was priorly defended, that is ES telling us that *something changed*. There is now enough supply present to overcome demand at a major pivot where there previously wasn’t. Therefore, we short and this began on Wednesday, when we lost 5594 putting bears in control and formally beginning what I have called all week “sell the bounce Mode”. I wrote Tuesday 4pm: “Bear case tomorrow:…There is also a breakdown short on the failure of 5694 available. Same thing here, and I’d need to see it accepted first, then a 5689 trigger”. This continued into yesterday, where we then lost the 5630 major level (which had been support since July 9th), triggering shorts again yesterday to 5570.
And today? It continued once again and after a 35 point overnight bounce, I wrote yesterday: “Bear case tomorrow: There are a couple shorts available tomorrow. The best is on the fail of 5566..5542 would be the magnet for this”. This triggered, and down we went to 5542 exact before a late day bounce. Will this bounce be sold like the rest? In today’s newsletter I’ll talk this, I’ll then do a deeper dive into my core short setup (the breakdown short). Finally, I’ll discuss the actionable plan for Monday.