As readers know, the theme for the past several months has been simple: buy the dips. The dips vary in size, speed, duration, and structure, but they all resolve the same way: they get bought.
How do bulls buy dips in ES? As I frequently discuss, nearly all major rallies in ES begin with Failed Breakdowns because Failed Breakdowns are how institutions accumulate. Institutions tend to accumulate when ES flushes hard and goes elevator down—losing, then recovering, a major previously established low. In doing so, institutions are able to trap shorts that are chasing the move, use them as liquidity, and then drive price sharply in the opposite direction once the low is recovered. This process is often correlated with an external headline shock, as institutions love to use headlines for liquidity to trap shorts. In rarer cases, they—or insiders—may be aware of those headlines in advance.
This is what we saw early yesterday morning. ES went elevator down from 7770 down to 7713 by 1pm yesterday. In doing so, ES lost 7716 which was a major 55+ point low from 130AM Tuesday. We recovered 7716 around 1130AM (Failed Breakdown), and ripped to 7750’s. Newsletter readers were given this long. After a Failed Breakdown like this though, the task for bullsis always to run it.
My guess for today was they could. I wrote yesterday at 3pm: “My general lean is always to defer to the broad trend. As long as 7715-16 keeps hold we simply will make our way higher to 7782, 7803 (likely dip there), then 7822, 7867 which is the magnet now.” We made our way higher today to 7782 exact high of day.
Was that the bottom? In today’s newsletter, I’ll expand on this, review today’s Failed Breakdowns—which are key to understand—and discuss the actionable plan for tomorrow.
