NOTE: Today’s newsletter sent early ahead of Meta and MSFT earnings after hours.

As readers know, the theme for the past several months has been buy dips. The dips vary in size, speed, duration, structure, but they all resolve the same: They get bought. We saw this attempted today after FOMC.

How do bulls buy dips in ES? As I frequently discuss all major rallies in ES start on Failed Breakdowns, because Failed Breakdowns are how institutions accumulate. Institutions accumulate when ES flushes hard and goes elevator down - losing, and then recovering a big previously set low. In doing so institutions are able to trap shorts that are chasing, use them as liquidity, then price rips the other way when the low recovers. Usually, this process correlated with an external headline shock as institutions love to use headlines for liquidity to trap shorts (or in rare cases, they/insiders are aware of headlines in advance).

From last Thursday into Tuesday ES built a clear shelf of lows at 7418. Today, we swept the shelf down to 7370’s, and the task for bulls was to recover. I wrote late yesterday: “Another option is to wait for a full Failed Breakdown of 7418.” Today we recovered, and ripped to 7450 after FOMC. Ultimately though, ES had been rangebound for the last week.

I expanded on this yesterday at 4pm: “Tomorrow is FOMC at 2pm. ES is rangebound from 7418 to 7506.” We defended the range after a trap below.

Bulls tried to buy the FOMC dip, but is this bounce a trap? In today’s newsletter I’ll expand on this, I’ll go over today’s Failed Breakdowns (these are key to know), and I’ll discuss the actionable plan for tomorrow.