SPX Pull Back - First Target 3960-4000

SPX is entering overbought territory. Price moves more like parabolic now. QQQ seems to make a double top. Stimulus and money printing may slow down and Biden's infrastructure plan has already been priced in.

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Successful trader / investor need three things -APM:
1. Analysis Skills & Knowledge - Technical & Fundamental. (What to buy / short?)
2. Plan / Strategy - (How and where to buy / sell?)
3. Mindset - passion, patience and discipline.(Execution professionally

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Market can do anything at any time. We do analysis for probability. The more price moves up with parabolic shape of curve, the heavier it will come down. Let's see how this plays out in the next several days:) I also sold covered calls for my SPX investment position, and bought some cheap VXX.

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I have observed the markets for several years. For these liquid markets, the price almost always move back and forth. If you don't take stop loss, there is a high likelihood price will come back in two weeks and your position become profitable. But most people end up take loss and then chase another "hot" market.

What is the chance for price continue moving up and not test 3960-4000? Very slim. After SPX moved beyond 1000, it went down to 750; after it broke 2000, it went back to 1800; after above 3000, it went back to 2200; and it is just a matter of time for the price to go back to 3200-3500. Not sure exactly when:)

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I observed that there is a slight divergence between VXX and SPX. SPX made new high today, but the VXX I bought on Thursday at ~10.34 has NOT lost any money yet. Interesting:)

This means the risk of holding VXX short term is low, while the potential profit can be huge if price moves down quickly for a correction some day next week.

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If we take a look at yearly chart, this bull market has been going on for over 12 years since March 2009. If we look at monthly chart, price has been rallying for 13 months since last March. 13 is an important Fibonacci time zone for potential market reversal or major correction.

No one knows exact top, I can't time it either. My best bet is that price will consolidate in a range in April/May/June, and then start a real bona fide correction.

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Another reason I'm thinking about market turn in June/July is that great earning reports are expected starting from next week (bounce back from COVID). The earning season + infrastructure bill expectation may hold the market on high ground for several more weeks.

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It will be a great time for big players to unload their shares to retail investors on the top for distribution. FYI, I spent several hours in this weekend to watch popular Youtube investment channels and internet bloggers.

Guess what, several of these "experts channels" are calling for a NEW bull market to start. The bull market already started many years ago, or many months ago depending on one's time frame. I believe it is dangerous to advise retail investors to build "large position" at this price level when almost all the good news are priced in already. The remaining: good earning reports?

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Many retail investors already got burned by investing in "hot stocks" early this year such as EV, small biotech, SPAC etc. Building long positions at this price level for stock index doesn't seem like a wise move to me.

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Add short position at 4142. 1st target is still the same close to 4000.

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Closed my position of VXX today, average purchase price ~$10, about 6% gain. VXX has time decay, cannot hold for too long.

Hold other short positions. The 1st target is still around 4000.

Daniel_APM

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