SP500 continues the correction.SP500 continues the correction. Based on the analysis, I assume that the first wave sequence shown in the figure is repeated. It can also be seen that the first wave sequence created a wider accumulation range (channel). This channel is sloping 6 degrees. The current accumulation range (channel) increases by 30 degrees. Determining these is important because we can identify the exact point of entry in the long direction. In the present case, this level is 3783usd. Up to this level, taking a short position in a 2-3 day trade can also make sense. The further decline may also be supported by the rising value of the VIX index.
Sp500short
S&P500 - The "Mayan Calendar" Chart Fearing an upcoming crash / correction I've been looking at all the key indexes etc, and this was one of my earlier explorations using Fibonacci.
I look at this chart with a large pinch of salt, more a fascinating oddity than something scientific (maybe!), but I do find all the correlations very interesting.
Ultimately this connects well with my Vix & Gold charts in regards to overall cycles so I do pay attention to this and it's progression.
Time will tell! Enjoy this "Mayan Calendar" chart as it was jestingly called on Twitter ;)
Shorting SPX Against the Crowd Long MentalityShorting the major US stock index with Reward/Risk of 1.88. The trade is kind of unpopular recently, but I smell enthusiasm is reaching exuberated levels, a clear sign we are very close to a medium-term top. When there is nobody with gun powder to buy more we will enter a bearish spiral. Not sure how far it will go, but this target I set looks easily reachable in a month or two period.
GME-style Returns in a Fortnight (UUP calls)There are compelling indicators that we are on a verge of a February 2021 market correction and the USD is expected to breakout due to investors moving from equities to bonds and USD. The VIX index and 10 year bond yield have increased significantly recently. 10-year Treasury note yield TMUBMUSD10Y, 1.149% booked its largest weekly rise since June. A rising USD is another sign of impending liquidity crunch, debt implosion and stock market crash/ correction. It might mean people are demanding cash and supply is short.
UUP.NYSE (consists 100% of Mar21DXH1/Dollar Index based on Invesco Product Detail Statement) is selected for the purpose of this research. It is evident from the chart that UUP has ‘predicted’ the March 2020 market crash and September and October 2020 market correction. The red flags are bullish UUP RSI rising towards the 70-80 range (a sign indicating smart money might be hedging their bets) and sustained MACD line (BLUE) movements above the MACD signal line (RED). Those two signals occur well ahead of the market crash and corrections, the RSI has 100% accuracy based on the most recent market dynamics.
Moreover, February is the second worst month in the history of markets after September according to records dating back to 1928. Gamestop aftermath and Robinhood CEO testifying before Congress on February 19th might present uncertainty and trigger market sell-off. Lawmakers with stance similar to Kevin O’Leary (Democrat-Massachusetts Secretary of State) are expected to make headlines in the near future under the façade of ‘preventing little guys (retail investors) from getting hurt’ reducing retail investors margin and increasing current margin requirements (thus reducing investors firepower). COVID vaccine news have been priced in but vaccine shortage and constraints remains and investors might want to book into their profits. . Recent major indices futures are pointing down too and indicate the bullish momentum is falling.
It might be a good time to hedge the market now through VIX or/ and UUP. VIX and UUP moves in the same direction but UUP calls are currently pennies with low implied volatility. UUP 19 Feb $ 26 calls are currently priced at $ 0.01, if UUP hits $26 on Feb 19, the profit and loss will be $ 4000 (on a $ 1000 investment) and $ 99,000 ($ 1000 investment) if UUP hits $ 27. opcalc.com
Gold-Copper Ratio, (very) LONG; This WAS the top of equities ...... most likely.
Let's reason for a second. (Despite all the noise out there.)
The title chart is the Monthly Gold/Copper Ratio, e.g. is very powerful. (It does not tend to turn on a dime!)
This has just completed the month of Jan. 2021.
1) It has finished the month by completing a Bullish Hammer, bouncing off of the (very) round number / level of 500;
2) It did so exactly at the 78% retracement of the March 2020 highs - i.e. Pandemic equity lows;
Then, instead of continuing down (equities continuing to rally) it did turn "on a dime" and finished in a Bullish Hammer - raring to go higher, i.e. equities lower.
3) As of this moment, the above picture, provides one with two distinct possibilities.
a) That massive (Monthly!!) Bearish Deep Crab is going to bear down it's target at the - very - round 1000, e.g. sending the SP500, Dow and Nasdaq to a better than >65% Decline; (Most likely!)
b) This ratio is going to trace back, close to the March, 2020 highs - Pandemic Equity lows - where it's going to reverse and rise, once again. I.e. The test of the March, 2020 equity lows are going to hold.
Either way, the significant take away here is this;
Unless these most recent Equity Index highs are taken out very soon - e.g. with this next month - Equities are headed strait to test the March, 2020 lows, where the obvious question remains: Will those hold?
Have a nice day and stay short equities!
Here is the Weekly chart;
S&P 500 Ascending Channel - Short SetupSPX500 Short Trade
Entry: $3,866.6
TP & RR: $3,840.5 (1.13)
Stop Loss: $3,889.7
REASONS FOR THE TRADE
Straight off the bat, you notice two things here - ascending channel and opening a position against the trend with what I consider a bad Risk:Reward Ratio of just over 1. However, I believe that price can form a double top with bearish divergence, retrace back to the lower trendline and then continue up. Of course, we will be looking to open a long order somewhere at the lower trendline.
Stop Loss is set pretty high in case there's a fakeout. However, we will close the position if there's a convincing close above the recent high.
SP500 - SHORT; SELL it here!With the credit spreads looking like they're about to blow out, equities don't stand much of a chance here, either. Look for at least a >-11% dive here.
.... or ... SELL the Nasdaq100 ...
... as it doesn't look much different, either. A little difference without much distinction.
Here is an other clue;
S&P 500 Exhaustion - Sell OrderSPX500 Short Position
Entry: $3,865.0
TP & RR: $3,828.3 (1.95)
Stop Loss: $3,883.8
REASONS FOR THE TRADE
Clear divergence in the Market Flow indicator and we are reaching a trendline, which I believe will act as resistance. SL is set well above it, so we give the trade some space to breathe and hopefully develop as we expect. Target is set at the previously established resistance, which should now act as support.
S&P 500 Reaches a Level of Resistance - Short TradeSPX500 - Short Position(s)
Entries: $3,784.4 / 3826.8
TP & RR: $3,728.8 (3.29 / 4.12)
Stop Loss Levels: $3,801.3 / $3,850.6
REASONS FOR THE TRADE
I think it's time for the SPX500 to take a break from this bull run. As such, I am expecting that price will reach either of the two levels that I would like to short. The Risk:Reward Ratio is favorable and the Stop Loss is just above the invalidation levels.
Now, you may be wondering why the SL of the first short is not placed higher, somewhere around the second order's SL. The problem is in the Risk:Rewards Ratio. If I am to do that, I will need to adjust my position size to account for the bigger gap between entry and SL. Also, the RRR of 3.29 will fall down to 0.84. So, even if I short from the first level and the setup proves to be valid, I will increase my capital by less than 1%, compared to over 3% if I keep the trade as it is.
Even if the first setup is invalidated, and we open a profitable short on the second level, the profit of 4.12R will compensate for the 1R loss and we will be at a profit of 3.12R. Of course, it would be unpleasant to lose 1% of the account, but that's just how trading works. You either take the risk or you lose the chance.
On a side note, since it's Monday, I am not placing those as limit orders, rather I have set alerts at the levels. When we reach them I will look at the volume, the 1h candle close, and will update the idea. We don't want to blindly place orders and hope for the best.
SP500 could correct to 3500, I'm waiting for confirmationSince the "election all-time high" just under 3700, SP500 continued its rise, but this is anemic to say the least with the index gaining around 3% in the past 2 months.
The rise is in a tight channel which for me is an indication of an imminent reversal.
A break under this channel's support can be the signal for sellers and 3500 is a very modest target for this trade(I believe it will drop harder)
S&P500 : The completion of the Diagonal patternIn240 minutes chart of the uptrend from the range of 3511 to 3833 is in the form of 3 waves which confirms the scenario of the formation of the Diagonal pattern.
Currently, to get the the confirmation of the downtrend,the price should not cross the range of 3841,because the 3rd wave should not be shorter than the other waves.
By crossing the price from this range,this scenario will be violated.
Thee confirmation for this pattern will be received by the formation of 5 descending waves,and by crossing the price from the range of 3660.
According to monitored position, personally,I set the short order.
By considering the RSI you can also see the convergence
ES (SP500) Short Setup (4th dec 20)Hi traders,
I'm bearish today (and monday) and you can find my targets and price action prediction on the chart.
Disclaimer: This is not a financial, trading or investment advice
PS: Remember to follow me, like and drop some comments
Stay healthy, trade safe.
Atilla Yurtseven