The Dip Was Bought *Again* In SPX. Is 5000 Coming? Feb 6 Plan

Last Wednesday to Friday saw the latest sequence of the breakout leg that formally began on January 19th, when ES broke out a month long, bullish inverse head and shoulders pattern at 4825. This breakout began what I’ve called “buy dips mode”, and since Jan 19 every dip has been systematically bought. The latest significant dip last Wednesday was also bought, beginning theismost recent sequence which saw ES rally 130 points in a 3 day stretch last Wednesday to Friday from 4860s, to nearly 5000.

Today started off with another dip in ES, and it was - once again - bought. I wrote on Friday: “A big issue currently is ES sees a routine 50 point pullback, and sentiment flips bearish so quickly (top calls, crash calls), that it instantly fuels the next leg of the squeeze”. We saw exactly this today, and got one of those routine 50 point pullbacks (60 points from Friday’s high to low of day today), and it was quickly bought up, to spend most the day basing after around 4965. I wrote extensively on Friday about the importance of the 4965 level, writing yesterday “Ultra short-term for Monday though, 4965 and 4954 are key” and 4965 was a key pivot all day today, failing this morning after 5 tests, before flushing, reclaiming, and spending much of the afternoon here.

Are we in the process of building a base for yet another push higher? In today’s newsletter, I’ll talk this, I’ll then do a deep dive into the setup that caused the Friday rally from 4930 to nearly 5000 (its one of my core 3 setups). I’ll conclude by discussing the actionable trade plan for Friday.