S&P 500: Maximum greed priced in for this month. Next days lower
Updated
The "S&P 500" had a very good run in the last weeks. But a peak has formed this month below the weekly R1 resistance, as Venezuela finally and officially defaulted on its bonds (to name just one current risk factor in the news today).
Short entry: 2587
Stop loss: 2597
1. Target 2537
2. Target: 2497
Risk to SL at 2597: 10 points
Reward (1. Target): 50 points
Reward (2. Target): 90 points
Venezuela’s Bondholder Meeting Is a Bust as" S&P" Declares Default
bloomberg.com/news/articles/2017-11-14/venezuela-s-bondholder-meeting-is-a-bust-as-s-p-declares-default
Short entry: 2587
Stop loss: 2597
1. Target 2537
2. Target: 2497
Risk to SL at 2597: 10 points
Reward (1. Target): 50 points
Reward (2. Target): 90 points
Venezuela’s Bondholder Meeting Is a Bust as" S&P" Declares Default
bloomberg.com/news/articles/2017-11-14/venezuela-s-bondholder-meeting-is-a-bust-as-s-p-declares-default
Note
The S&P 500 declined down to 2557.45 so far this month, one day after sharing my bearish outlook.Trade active
My original short from 2587 I had opened Monday remains in profit, despite the strong bounce on Thursday.I added to my short position today at 2584. Ideally I can add another short around 2587 before the next leg lower starts.
Trade active
Good news for everyone following this bearish idea since November 14:Short orders at 2587 got filled today on November 16.
The high today hours before the close was 2587.89
Trade closed manually
I closed the short I opened at 2584 yesterday today in profit at 2579.Yesterday I got filled with shorts at 2587, 2588, 2589. I closed all these shorts in profit today, too - except for the short from 2589.
I just don't like to hold short positions over the weekends, that's why I closed almost all shorts. Essentially during this week I replaced my old short from 2587 with a higher short entry from 2589.
Note
I forgot to mention that I lowered the stop loss for my short from 2597 to 2589.Reason: Either the market breaks out to a new all-time high next week. Then it doesn't matter where above 2590 you place a stop loss as any move above 2590 most likely will result in a breakout beyond 2600. Or we see more weakness next week. In that case the market is likely to stay below 2589.
Trade closed: stop reached
The good news: There is no big loss. As I had said on November 17 I had replaced that previous day my short from 2587 with a short from 2589 and changed the stop loss from 2597 to 2589 (in the week before the S&P 500 broke above 2600).The bad news: The market has become so irrational bullish, despite the falling 10-year/2-year US Treasury spread (the most reliable recession predictor) that most of my own backtested indicators and also indicator tools developed by other traders which I use - start to not work anymore.
Note
More good news. At least anyone who followed this idea had a chance to make money twice.First chance to make money was after I had published the short idea right before the open of November 14. That day the E-mini futures had declined down to 2564.25 and the following day even sharply lower down to 2555.50.
Second chance to make money was after I had marked the short trade as active from 2587 on November 16. The next day the E-mini futures had declined down to 2575.75 and the following trading day on November 20 down to 2567.75.
Note
The S&P 500 is starting to get weaker as of the close of December 22, right in the time area where I had on October 19 projected risk to the downside for December.But it's looking a few day too early to short here, which is why I only wrote a comment as update instead of sharing a new chart.
(Please zoom into the read colored area to see the potential weakness)
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