Will Today's Dip In SPX Get Bought Like The Others? April 17th Plan
After selling off 935 points from April 2nd to Sunday April 6th (the current bottom), ES had temporarily returned since then to what I’ve called “buy dips mode”. For the last 1.5 weeks - in contrast to weeks prior - dips have been bought. Some of these dips were massive: 430 points on April 9th, 375 points on April 10th, 130 points on April 11th, 140 points today, but they were bought. This relief rally has been occurring in the context of a downtrend and as I said yesterday: “Big picture, we remain in a downtrend and this won’t change until ES recovers the red megaphone in the above chart up at 5700ish.”
In ES, bounces and short squeezes are caused by my core setup: The Failed Breakdown (also known as the bear trap) and we’ve essentially seen one per day for the past week. Last Friday at 10:30AM saw a particularly violent failed breakdown, where we sold off a few hundred points down to 5251 low of day - and in doing so, swept under a major low at 5258 set a few hours prior, recovered it, and squeezed. I provided this long setup to readers on Thursday, and after rallying all day Friday to 5416, I wrote Friday at 4pm that: “My general lean based purely on technicals is that we continue up. 5428, 5484, then 5505-15 are initial targets.” We got to 5484+ high on Monday, and from Monday until yesterday at 6pm. ES had been building a wide range. I stated at 4pm on Monday that: “ES has broadly been in a relief bounce now for a week. For tomorrow, ES is rangebound 5408 to 5469/5485.”
Yesterday, ES ping ponged this range exactly selling to 5408 Monday at 430PM and rallying to 5485 high of day yesterday before selling. This type of low volatility rangebound activity probably reminded people of the bull market days back in 2024. Last night at 6pm however, bulls were reminded again that this is not 2024, with a deep news driven gap down to 5377 breaking down the 5408 to 5485 range. I wrote yesterday: “Bear case tomorrow: Begins on the failure of 5395.” And we lost that at 6pm last night then sold to 5251 this afternoon before a squeeze into the close.
The question now, is will this dip get bought? This is a big test, and if it speaks to the health of this rally the last two weeks. There is only 1 day left in this week and tomorrow is OPEX day before a 3 day weekend. In today’s newsletter I’ll talk this and I’ll do a full rundown of every Failed Breakdown we have had for the last 5 days (1 per day). Finally, I’ll discuss the actionable trade plan for tomorrow.