TL;DR
• The market just saw its second-biggest sell-off since April. This massive drop was followed by an equally aggressive dip-buy today.
• This is a day trader's paradise, but a nightmare for anyone trying to hold a position overnight. The key is not to get caught on the wrong side of the violent, bi-directional moves.
• Price is following a predictable pattern: a sharp drop, a failed breakdown that traps sellers, and a squeeze back up to test the prior breakdown level.
• The big question now is whether today's bounce was a real bottom or just a temporary relief rally before the next major leg down.
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Quickfire Highlights
Nvidia's Post-Earnings Drift
After the explosive earnings report, NVDA is now consolidating. Watch to see if it can hold its recent gains, as its direction will heavily influence the Nasdaq.
VIX Compression
The VIX spiked hard during yesterday's sell-off but came back in just as quickly today. This shows fear is subsiding, but it also means complacency could be setting in.
We are in a high-volatility, choppy market regime. This is not a market for setting swing trades and walking away. It's an environment that rewards nimble, disciplined day traders who can capitalize on extreme moves in both directions.
The recent behavior has been textbook. We saw a massive 200-point rally reversed in a single day, which created widespread panic. True to form, that panic was the fuel for today's sharp bounce. The market is currently hunting for liquidity and punishing anyone who is over-leveraged or indecisive. The dominant pattern is mean reversion, but the moves between the extremes are fast and brutal.
The market is running a simple, three-part playbook over and over. If you can spot which part of the cycle we are in, you have a massive edge.
• The Elevator Drop: This is a violent, one-way sell-off that slices through support levels like they aren't there. We saw this perfectly yesterday when ES collapsed from the 6700s, reversing the entire prior rally. These moves are designed to cause maximum panic.
• The Failed Breakdown and Squeeze: After an elevator drop, the next setup to watch for is a failed breakdown. This is when the price tries to make a new low, fails, and then quickly reclaims the prior support level. Today, we saw this unfold exactly as planned. Price tested 6542, held, then reclaimed 6553, which triggered a powerful squeeze as trapped shorts were forced to cover.
• The Back-Test Rejection: This is the final part of the cycle. After a squeeze, the price often rallies directly back to the major support level that was lost during the initial elevator drop. This level now becomes major resistance. Last week, 6790-6801 was that level, and bulls failed multiple times to reclaim it, which led to yesterday's collapse.
Understanding the key levels is everything right now. They are the battlegrounds that will determine the next major move.
• Pivotal Resistance Zone: 6638-42. We rallied directly into this zone today. This is the moment of truth. If bulls can push through and hold above this area, they have a chance to continue higher. If they are rejected here, it suggests today was just a bounce.
• The Major Ceiling: 6790-6801. This is the massive resistance shelf that caused the October 13th breakdown. Bulls have failed here multiple times. Until this level is cleared, bears technically remain in control of the bigger picture.
• Critical Support: 6542-6553. This was the launchpad for today's squeeze. If we lose this level again, the odds of making new lows increase dramatically. This is the line in the sand for the bulls.
My plan for Monday is simple and based entirely on how the market reacts to the 6638-42 zone. I am not leaning bullish or bearish; I am letting the market prove itself.
• The Bull Scenario: If we see a strong bid and the market can clear 6638-42, I will look for long opportunities. The targets would be 6664, 6685, and then the major resistance at 6701-03. A clean break of that zone would signal the start of a new, sustainable leg higher.
• The Bear Scenario: If the market stalls at 6638-42 or pushes slightly above only to fail, it would confirm today was a dead cat bounce. I would then look for short setups, targeting a move back down to 6553 and the critical support at 6542.
If the action is messy and inconclusive around the pivot, the best trade is no trade. In a choppy market, cash is a safe and valuable position.
• Bloomberg (Nov 20, 2025): Fed Officials Signal Caution on Future Rate Hikes Amid Mixed Economic Data
Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before making investment decisions.