SPX Tightens into Compression Zone: Breakout or Breakdown Next?

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It was one month ago yesterday that ES marked its major low at 4835. Since then, we’ve been in what I’ve called “buy dips mode.” April brought 300- and 150-point dips, but unlike earlier in the year, each dip was met with aggressive institutional buying.

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Buy-the-dip behavior intensified over the past two weeks. However, coming into this week, the market broke its 9-day green streak with two red closes—something I cautioned about in last Friday’s note as “Hangover Monday.” This correction phase has been choppy but calculated.

Gold hitting record highs

The price of gold keeps heating up. If the record-breaking year of 2024 wasn't enough, gold hit a major historic 2025 milestone by crossing the $3,000/ounce threshold!

Here are 3 Key Reasons:

1. Looming economic & political uncertainty

2. Increasing central bank demand

3. Rising National Debt - over $36 Trillion

So, could gold surge even higher?

According to a recent statement from Jeffrey Gundlach, famed American business man and investor… “Gold continues its bull market that we’ve been talking about for a couple of years, ever since it was down to $1,800.” He expects gold to reach $4,000/oz.

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FOMC Day Setup: Core Play in Action
Wednesday’s session was textbook Failed Breakdown execution. I wrote Tuesday: “Below 5620, we should see a new low to 5597–5600. Instead of just buying this, a safer bet is to wait for the Failed Breakdown of today’s low, slightly above at 5607.”

At 4:40PM Tuesday, ES dipped to 5607, flushed lower, and then snapped back above that level—triggering a squeeze to 5689. A classic 80+ point move. For those who missed it, Wednesday gave a second chance. After selling to 5597–5600 post-FOMC, ES recovered 5607 and squeezed again to the 5670s.

Core Setups This Week:

• Monday: Failed Breakdown at 5607 triggered a rally to 5706.

• Tuesday: Breakdown Short (my third setup type) caused the selloff.

• Wednesday: Failed Breakdown at FOMC low added confirmation and upside follow-through.

We’re rangebound—but rangebound at compression. Can bulls break this sideways action and turn it into new highs?

Actionable Plan for Thursday:

• Bulls want to defend 5600–5607 again on any dips.

• A breakout above 5711 could signal renewed upside toward 5735–5750.

• A break below 5597 with no recovery opens downside to 5560 and 5525.

Learn More:

• Stocks Swing as Fed Holds Rates Steady

• Failed Breakdowns: A Technical Trader’s Secret Weapon

• S&P 500 at Resistance: What Comes Next?

• Market Reactions to FOMC in Historical Context

• Inside Day Patterns: Why Traders Watch Them Closely

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Please consult a licensed financial advisor before making any investment decisions.