Short $SPY with April - May Seasonality
Updated
The end of April brings a selling opportunity, historically near the FOMC statement and the bulk of tech earnings. This week we had the bulk of tech earnings with FAANMG + TSLA reporting. Combined with the FOMC catalyst I believe this is a great opportunity to either go to cash, or short the markets.
The day after the FOMC SPY posted a Hanging Man top. This particular pattern is pretty accurate, where the price gaps to a new high, drops to a low and fills the previous day's close, then gets bought back up to close very near the opening price (and hopefully just below the opening price).
The attached idea for NDX/QQQ showed a very similar setup. We will know if this trade is legitimate if the price gaps down this morning (Friday April 30) and immediately charges for the previous day's low.
I have very conservative targets for this short, since recent years have show that the "Sell in May" trade has been somewhat muted. I blame this on the QE years beginning in 2009. The left weekly chart shows a pop in the % distance above the 200 week moving average. This level has not been since since the 1996-2000 era. Weekly RSI is also overbought. The right chart shows a possible bearish RSI divergence setup.
16 Year Seasonality SPX (Simple Average) - Close longs and/or short post April FOMC
16 Year Seasonality SPX (Exponentially weighted) - The difference here shows that when recent years are given more weight, the "Sell in May" trade is flat/muted.
The day after the FOMC SPY posted a Hanging Man top. This particular pattern is pretty accurate, where the price gaps to a new high, drops to a low and fills the previous day's close, then gets bought back up to close very near the opening price (and hopefully just below the opening price).
The attached idea for NDX/QQQ showed a very similar setup. We will know if this trade is legitimate if the price gaps down this morning (Friday April 30) and immediately charges for the previous day's low.
I have very conservative targets for this short, since recent years have show that the "Sell in May" trade has been somewhat muted. I blame this on the QE years beginning in 2009. The left weekly chart shows a pop in the % distance above the 200 week moving average. This level has not been since since the 1996-2000 era. Weekly RSI is also overbought. The right chart shows a possible bearish RSI divergence setup.
16 Year Seasonality SPX (Simple Average) - Close longs and/or short post April FOMC
16 Year Seasonality SPX (Exponentially weighted) - The difference here shows that when recent years are given more weight, the "Sell in May" trade is flat/muted.
Note
Major player is stacking shorts on AAPL or getting out all together. Doesn't look healthy.#BlockSummary
⇢ Symbol: AAPL
⇢ Sessions: 5
APR 30 2021, 10:07 AM EDT
VOL (K) | PRICE ($) | 🔼
--------.-----------.----------
📈
AAPL--------.--(APR30)--.----------
● 5,242 | 131.79 | 💚 +0.46%
1,015 | 131.79 | 💚 +0.46%
--------.--(APR29)--.----------
720 | 135.35 | 💔 -2.18%
817 | 134.23 | 💔 -1.36%
● 3,000 | 133.20 | 💔 -0.60%
--------.--(APR28)--.----------
828 | 134.32 | 💔 -1.43%
--------.-----------.----------
💲 Block level ($)
● Confirmed dark pool block
💔 % BELOW block level
💚 % ABOVE block level
Note
Side note, EURUSD seasonality matches the drop for this time of year post FOMC. I am expecting further declines in XXXUSD as investors take a break and flee to cash for 1-2 weeks.Equity markets have demonstrated that DXY strength leads to stock weakness these last several months.
Note
We are interested in seeing the low of yesterday's hanging man candle broken. Our April targets were met at the big R3 in this picture. All longs closed and shorts opened on ES and NQ.Note
Not a lot of weakness seen. SPY did break the Thursday low but only for a moment. NQ was propped above the Thursday low.We may only see a slight may correction (similar to 2020) before bouncing higher again.
This trade has low expectations of a pullback.
Note
Puts are your friend in this scenario. Let the possible IV climb do work for you, rather than direct shorts.Note
Dark pools have stacked 30 million at the top on SPY now. We are bearish below.Report: ibb.co/4YpPknq
Note
A 1.8 million premarket dark pool block showed up on AAPL this morning. They sold post earnings. The summary for the past several sessions is painting a bad picture walking forward to mid May.Report: ibb.co/Lzr2Xh3
Note
Big level here for NQ on multiple supports. It's tough to go against the massive AAPL stacked sells however.Note
Yeah, good luck. They are letting NASDAQ run today (lower) with all the stacked AAPL blocks against it. NASDAQ 500 points off the top when this short was initiated. Doing well.Trade closed manually
Stopped in profit yesterday with that end of day random pump into NFP. The better trade has been long YM (blue chip value) and short NQ (tech). Equal equity weight long YM and short NQ has worked very well last few days.YM is in full breakout mode. NQ suffering.
Note
Turned out to be a great trade, just needed to hold through some chop and short that NFP terribleness.Next time, NDX should be the choice on the short, as that served much better and down nearly 10% from the ATH, similar to March.
Trade closed: target reached
The last two days I took out larger ES and NQ longs in preparation for the mid May bottom. I do not know if we are going to get new ATHs, but I will try to ride out the move as long as possible over the next 2 weeks.
VXX is dropping like a stone.
Find the edge.
Website: daily-edge.com
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Website: daily-edge.com
Twitter: twitter.com/dailyEdgeGroup
Youtube: youtube.com/c/TheDailyEdgeTradingGroup
Telegram: t.me/mortdiggiddy
Paypal: paypal.me/mortdiggiddy
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