S&P500: Market topping against the monthly mode
Updated
In a sideways range, you want to fade extremes, right?
What is more extreme than the rally we've observed off this year's low?
Vix has declined sharply, in a steady pace, making fresh quarterly lows, a strong level of complacency is observed, whilst the price action in the daily confirms we're due for a correction in equities.
This is clear in many large cap stocks, as well as observable in oil, which had led the market into this climb, after a coordinated effort to prop its price higher, weakening the dollar, which was weighing heavily on earnings and after the Fed's attempt at normalization of interest rates, created a heavy correction accross the board.
Currently, the short interest remains elevated, and we have signs of weakness in lower timeframes.
I'd reccomend going short, either via options, buying volatility, yen, bonds, or shorting SPY or S&P500 futures (or CFDs).
The stop loss and entry, I will reserve for my signals group for the time being.
As a general guideline, when in doubt, go by volatility (ergo, use Average True Range to determine your stop distance).
If you have a suitable technical strategy to trade into this move, feel free to do so if you agree.
Downside is very appealing, considering the minimal upside risk we have here.
Good luck,
Ivan Labrie.
PS: Check my profile or pm me for information on trading signals or tuition.
What is more extreme than the rally we've observed off this year's low?
Vix has declined sharply, in a steady pace, making fresh quarterly lows, a strong level of complacency is observed, whilst the price action in the daily confirms we're due for a correction in equities.
This is clear in many large cap stocks, as well as observable in oil, which had led the market into this climb, after a coordinated effort to prop its price higher, weakening the dollar, which was weighing heavily on earnings and after the Fed's attempt at normalization of interest rates, created a heavy correction accross the board.
Currently, the short interest remains elevated, and we have signs of weakness in lower timeframes.
I'd reccomend going short, either via options, buying volatility, yen, bonds, or shorting SPY or S&P500 futures (or CFDs).
The stop loss and entry, I will reserve for my signals group for the time being.
As a general guideline, when in doubt, go by volatility (ergo, use Average True Range to determine your stop distance).
If you have a suitable technical strategy to trade into this move, feel free to do so if you agree.
Downside is very appealing, considering the minimal upside risk we have here.
Good luck,
Ivan Labrie.
PS: Check my profile or pm me for information on trading signals or tuition.
Note
One comment, timing for the correction can be anywhere between 1 and 10 months.(I'd estimate we'll see a violent move, which would wash out any kind of bullish sentiment from the masses, and then reverse up!)
Note
So far, deleveraging thesis is proving to be correct. Crude and Nikkei were leading, then Dax and now S&P500 too. We're in for a heavy correction.Note
As expected, nice downside here, let's see if we break lower.Note
Correction might be unfolding now.Note
We've formed an 11 bar mode here, no downtrend signal spotted yet.
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