Todays New All Time High In SPX Failed. What Now? July 16 Plan
Last Thursday, ES did something it has not done often recently: Put in a red day. Specifically, it put in its largest red day since May 23rd, and as with every red day in ES provoked the usual chorus of “top is in calls”. It is a testament to how extreme sentiment is and exacerbated by social media, as years ago it would take weeks of selling before people talked about a top. Also as usual though, that Thursday dip was bought, and in this case - violently so.
As readers know, I provided the setup for this long on Thursday at 4pm, writing: “If we get a failed breakdown of today’s lows (perhaps down to 5624) then recover, I’d consider adding on that setup”. We put in a textbook failed breakdown Friday morning of the Thursday low (my core setup), then were off to the races for a massive squeeze that took us back to the ATH 5710 and ultimately, into today. In the final minutes of trading on Friday we got another deep flush, and like the others, this also provided a long entry last night, once again on my core setup (the failed breakdown). I wrote in my Friday/Sunday newsletter: “As long as 5649-51 can hold on any Monday dips (and if bulls are very motivated, we will failed breakdown 5672 directly on Monday without this) then ES can try probing the top of the range again to 5690, then 5708”. We saw exactly this today, putting in a failed breakdown of 5672 and rallying to 5708+ today, making a new ATH, then dipping into the afternoon.
These past couple days action show just how powerful failed breakdowns are with almost every significant move coming on one. Today however, after making a new ATH, ES finally dipped. What does it mean from here? In today’s newsletter I’ll talk this, I’ll run down the two failed breakdowns we have had this week (seeing as many examples of these is essential). Finally, I’ll talk the actionable trade plan for tomorrow.