TL;DR
• Today's early release: Big earnings from Apple and Amazon are on deck after the close, demanding our attention.
• ES just paused its epic 7-day, 250+ point parabolic sprint, a run previously fueled by a clear two-week triangle breakout.
• We caught this entire move using our trusted "Failed Breakdown" setup, a reliable signal of institutional buying.
• Now, after the first real dip in a week, the big question looms: Is this simply a breather or the start of something bigger?
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Quickfire Highlights
• Apple & Amazon Earnings Tonight
Big tech reporting after the bell will dictate the market's mood and direction into Friday. Get ready for volatility.
• SPX Momentum Check
After a relentless 7-day rally, the index saw its first significant pullback, prompting a reevaluation of bullish conviction among traders.
• Failed Breakdown Continues
Even in today's dip, our key setup provided actionable entry points, reinforcing its reliability and demonstrating its power.
We just experienced an incredible 7-day trending up phase, a parabolic sprint that saw ES climb over 250 points. This was a clear bullish breakout from a two-week triangle pattern, a powerful move for the bulls. Yesterday marked the first significant pullback, shifting the immediate behavior from relentless trending to a more mean-reverting, potentially choppy phase, particularly with major earnings ahead. Today, we saw lower volatility and a slight cool-off, but the market's underlying structure remains technically strong post-recovery.
Our bread and butter, the "Failed Breakdown," continues to be the most reliable setup in this market. It's a two-part sequence, the unmistakable footprint of institutional accumulation, signaling a powerful short squeeze.
• The Two Siblings: First, price goes "elevator down," flushing nearby support and trapping late shorts. Second, the short squeeze ignites as ES recovers a significant low, leading to a rapid rip higher. It's predictable price action.
• Oct 22 Catalyst: We used this exact setup to go long over a week ago. On Oct 21, I advised waiting for a Failed Breakdown of the 6694 daily low. The next day, ES flushed to 6690, recovered 6694, and then kicked off the 250-point rally, breaking out of that two-week triangle pattern.
• Post-FOMC Re-entry: After FOMC yesterday, ES dropped 65 points. We identified a cluster of lows around 6901 and 6903. Price swept these to 6882, recovered 6901, and squeezed to 6950 last evening. This was a classic execution.
• Today's Play: The pattern repeated this morning. ES fell from 6950 to 6869. Our plan from yesterday highlighted the 6882 daily low and the important 6869 support. Price tagged 6869, recovered 6882, and squeezed to 6910. The consistency is truly remarkable, validating our approach.
The market is currently consolidating after its powerful run. The 6950 level represents recent resistance after the post-FOMC squeeze. Below that, 6910 is where bulls showed some fatigue today after the latest Failed Breakdown. Critical support lies at 6882, today's pivot point, and the deeper 6869 level, which proved strong earlier today. Maintaining prices above these levels indicates continued underlying strength, but a break below could signal further bearish conviction. Tomorrow's open will be heavily influenced by post-market earnings, so watch these levels closely.
Tomorrow’s session will undoubtedly be driven by how Apple and Amazon earnings are digested after the bell. Our immediate focus will be on the reaction around today’s established levels.
• If bulls maintain strength post-earnings, look for sustained price action above 6910, with eyes on challenging 6950 and higher. A Failed Breakdown of any retest of 6882 would be a strong long signal, confirming renewed buying pressure.
• If earnings disappoint, expect a test of 6882 and potentially 6869. Here, a failure to hold 6869 could open doors for further downside. However, remember our setup: even in a flush, a Failed Breakdown of these key supports will be our primary long entry, signaling a potential reversal.
Stay flexible, respect the levels, and let the market tell its story. Volatility could be high, so focus on clean entries and exits, protecting your capital above all else.
Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before making investment decisions.