Three Green Days In A Row For First Time In April. Can Bulls Manage 4? April 25 Plan
Since April 6th (ES set its major recent low there at 4835), ES has been in what I’ve called buy dips mode and since then, every major dip has been bought to prevent the trek down to new lows. We’ve had some big ones: We had 430 point sell on April 9th, 375 point sell on April 10th, 130 point sell on April 11th, 233 point sell last Wednesday, and 56 point sell last Thursday and Monday a 177 point sell. All of these were bought up and Monday’s all day dip in particular was bought to produce a massive 385 point squeeze.
As readers know, my primary edge is trading these squeezes. In ES, every major sharp selloff has a rebound effect where a short squeeze is produced after. These two things are siblings and whenever you have a sharp sell, a short squeeze is around the corner. Short squeezes are caused by my core setup: The Failed Breakdown, and we had one at the close on Monday where ES lost the April 10th low a 5155, sold down to 5129, recovered it, and squeezed. Its why I entitled my Monday newsletter: “New Lows Coming For SPX? Not So Fast”. When online sentiment suggested the end of the world was coming we (and institutions) were getting long.
I wrote on Monday at 4pm (when we were 5160s): “My general lean is ES can try to backtest 5231, then 5248-52. Bulls need to clear that to get excited about anything…Once 5248-52 clears, ES can head significantly higher to 5315 then 5377+.” By Tuesday at 6pm, we gapped up on Tariff news and we hit 5377+. We then spent all day yesterday building a base above 5377/87. After trend, comes range building and I surmised yesterday this new range would be 5377 to 5475.
The goal for bulls today would be to fill this out and keep this rally going, and ideally, not fill the big Tuesday gap. I wrote yesterday at 4pm: “My general lean is we can fill out the 5377/87 to 5475 range more. Breakout of this would target 5515, 5529+”. We saw exactly this today, we held 5377/87 this morning and ran to 5475 exact which was the morning high, then ran to 5510-15 by 3pm. Can ES put in a 4th green day? In today’s newsletter I’ll talk this, I’ll do a deep dive into the setup(s) that caused this weeks 370+ point long and I’ll also discuss my trailing stop methodology in detail. Finally, I’ll discuss the actionable trade plan for tomorrow.