Will Today's Dip Buy Sustain In SPX, Like The Others Have? May 1st Plan
We entered into today with ES on quite an incredible run: 6 green days in a row, something it had not done since November 2024. While 6 green days is rare, the fact we have been rallying isn’t surprising and as discussed since April 6th, ES has been in what I call “buy dips mode.” The dips vary in size, duration, speed, and cause, but they get absorbed in a reasonable time frame before price can revisit the lows. As a brief compilation of the dips since April 6th, we had: We had 430 point sell on April 9th, 375 point sell on April 10th, 130 point sell on April 11th, 233 point sell April 16th, and 56 point sell April 17th, last Monday a 177 point sell, last Wednesday a 141 point sell, last Friday a 67 point sell, Monday we had had a 88 point sell, and yesterday we had a 51 point sell, all were bought.
As I discussed all week, we don’t need to be psychics or know when dips will be bought. Dip buys occur when ES puts in my core setup: The Failed Breakdown. Price flushes hard, loses a support, then instantly springs back up to put in a Failed Breakdown. This is the footprint of institutional accumulation, and tells us to go long. Everyday nearly since April 6th, we have seen this. Price sells, puts in a Failed Breakdown, builds sideways structure, breaks out, then repeats. This continues until ES loses a major structural support.
The last couple days have been a perfect encapsulation of this. Back on Friday, I wrote that ES had broken out of a 1.5 week bull flag at 5492, stating: “We broke out a large bull flag at 5492-85 and bulls need to hold it on dips. As long as we are above it, next targets are 5565-67, 5582, 5620-25, 5650, then 5679.” What did we see on Monday? We sold to 5492-85, exact, put in a Failed Breakdown of a shelf of lows from Sunday evening at 5515, recovered, then rallied to 5565 then 5582+ by yesterday’s close.
However, today, it would be tested. I wrote yesterday: “Its worth noting we are 6 green days in a row now. Nobody should be remotely surprised or shocked if we get a Mode 1 red day (or at the very least, an extremely deep sell) at some point this week on the right headline where every support just collapses through.” The trigger for this sell was the failure of 5565, and I also wrote yesterday: “Bear case tomorrow: Needs to lose 5485-93 which is much lower. On a short-term basis though, the failure of 5565 tomorrow could provoke a sell.”
We lost 5565 at 8am, and down we went. Like every other dip though, this sold to 5457, triggered a Failed Breakdown long above the Monday 5492 low (provided explicitly to readers yesterday) and back up we went to 5565. Another dip bought.
Can bulls keep it going? In today’s newsletter I’ll talk this, I’ll do a deep dive into the Failed Breakdown we saw on Monday (referenced above) as well as an additional Failed Breakdown we had on Tuesday 930AM below 5534 which setup yesterdays squeeze. Finally, I’ll discuss the actionable trade plan for tomorrow.