The Biggest Sell In SPX Of 2024 Just Hit. Does It Have Legs? Feb 14 Plan
Yesterday, the final two sentences of my newsletter were the following lines: “I will say here - for the first time in many weeks - that I am quite cautious now on the long side.” The timing on this was fortunate, and in the after hours last night we grinded lower, with CPI kicking off an instant, algorithmically driven melt-down.
What was the technical trigger for this sell? For weeks I have said the same thing: That ES gets a sell, when, and only when, a major support fails. For today, this was the 5018 level, and I wrote yesterday: “If 5018-20 fails, I think we’d be in for a deep flush, and I want to be short below there” adding: “Bear case tomorrow: Simple and starts on the fail of 5018-20”. This played out exactly and Right before CPI we tested 5018-20, sat there, then CPI triggered the loss of that level and we went into free fall finally. Charting 101 here: It was the breakout of 5018 that started the latest leg up on Friday, and its failure ended it, triggering shorts.
Today’s sell was the largest sell of 2024 so far by a small margin, but will it stick around, or was the late day bounce the bottom, to get bought up like all the other dips? In today’s newsletter I’ll talk this, I’ll then discuss the sequence of events that lead into today’s selloff (it fused together two of my setups - the failed breakout, and the breakdown). Finally, I’ll discuss the actionable trade plan for tomorrow.