Wednesday’s drop was fast and aggressive — 1.47% in just 30 minutes — but if you’ve been following my levels, this was exactly the kind of move I’ve been preparing for.
I’ve been dying for a pullback for a while now, so could we finally get it?
Price blew through 5,900 (SPX) and tagged 5,875, both levels I highlighted in advance. The follow-through was sharp, but I’m not worried — I’m welcoming it.
In fact, I said over the weekend I’d love to see a 3% to 5% pullback. Not because I’m bearish, but because it would give me the shot to reload. There’s a clear gap left behind from the U.S.-China announcement — that gap starts around 5,700 and runs down to about 5,680.
If we can fill that, I’ll start looking to add.
A Pullback Doesn’t Break the Bull Thesis
I’m still bullish. We’ve been on a melt-up since early April with barely any meaningful corrections. That’s not sustainable — even in a strong uptrend, the market needs to breathe.
A 3% pullback gets us into the top of the gap. A 5% drop fills it. That’s a shallow dip in the bigger picture and one I’d gladly buy into.
Below that, we’ve got another gap closer to a 10% pullback — and I’m fine with that too. If we trade down there, I’ll look to step in with even more size. I’m not going to guess where the bottom is, but I will take bites along the way.
Bulls Need to Reclaim 5,900
If the bulls want to stay in control, they’ve got work to do. We broke through support and now need to reclaim 5,900 to reestablish momentum. Until then, I’m keeping an eye on levels like 5,800 and 5,700 as potential buy zones.
This is all part of the game. I’ve already locked in profit on butterfly spreads, and I’ve got put spreads in place as a hedge. If the market keeps falling, I’ll get paid on those. If we bounce and start building support again, I’ll get positioned for the next leg higher.
Pullbacks are part of the process. Don’t panic — plan, and then act when the time comes.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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