We Are Building a Base For A New Trend Leg In SPX. Feb 29 Plan

As discussed on Sunday, for the past 6 weeks ES has been locked in a predictable cycle. In general, it has been: ES ends the week strong, the last two weeks were case in point where ES went parabolic on Thursday and Friday. It then starts the week with what I call “hangover Monday and Tuesday” where ES typically pulls back, or chops brutally from Monday often until Wednesday.

I warned about this Sunday when I wrote “There has been a strong tendency for the last several weeks to have what I call hangover Monday and Tuesday. For the last 6 weeks in a row, we have seen either sharp selling or ugly consolidation in Monday/Tuesday” and this week was no different, dipping Monday and Tuesday, then trying to rally today but ultimately spending the day in the same range. This Tuesday dip was buyable though, and I wrote yesterday: “5066 remains major support, but was already tested today once. One can bid it, or try waiting for the failed breakdown of today’s low”. This played out nicely, and we dipped to 5066 overnight/this morning, then rallied out for a good tradeable 20 point move, before fading in the afternoon.

Of course though, no cycle lasts forever and in market terms, 6 weeks in a row is pushing it hard for any predictable tendency. Will ES break the streak this week and go red on Thursday and Friday? In today’s newsletter, I’ll talk this, I’ll continue my ongoing failed breakdown series (my core setup) and do a deep dive into the 4 quality failed breakdowns we have had in the last week. Finally, I’ll discuss the actionable plan for tomorrow.