TradeWithAdam
Short

S&P 500: It's time to sell the news!

CME_MINI:ES1!   S&P 500 E-mini Futures
It's official. As of tonight, China and the US are starting to put pen to paper on a trade deal. The overnight futures rushed to 2798 when Reuters broke the story. This news comes after weeks of hearing about a 'trade deal coming' and the market pushing higher on every notice.

As I type this, the futures are coming off of their session highs (now around 2794) and my guess is that tomorrows open won't see the futures much higher than this. Most people were looking for resistance in the 2810-2850 range so it would be perfectly apt that we never even see those numbers. Besides, a very subtle 5 month trendline (drawn above) is in play acting as resistance.

If you have access to the overnight markets, I would short the futures here at 2790-2798. I do not think we will see an up-open in the market.

Furthermore, any break of the support trendline drawn above will mean much further downside to come. However, I suspect that trendline break will not occur until next week.

Short SPX between 2790-2798
Target: 2750
Stop: 2805
Comment: Head and shoulders being formed on the hourly ES chart. We are at the top of the right shoulder. So we can short ES/SPY/SPX here with a tight stop.
Trade active
Comment: We can easily define our risk here right up against the trendline. It's also options expiration Friday with a lot of OI on the 280 strike in SPY so it is unlikely we close above it.
Trade closed: stop reached: Stopped out on more China news. Tough to be a short in this market!
Tough to be anything in this market Adam. We were both right and wrong depending on the time of day. As soon as you're stopped out it goes down. Frustrating.
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@miket56, for sure! The market definitely ran right into that classic resistance and did an about-face today. I'm interested to see if we challenge that support trendline on the futures chart in this idea and just how much we bounce off of it.
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@TradeWithAdam, I'm not so sure Adam. Yes, a H&S may form, but recently short time frame H&S have retreated quite a way before going in the expected direction, if it forms. I see a large ascending triangle as you have drawn, which are bullish by nature. Also short orders have been in the majority since the end of December and the market has continued to rise. They have continued to increase, now at 4.5 - 1. I think this could easily break out the top resistance line and go up a while longer. The last two 1h & 4hr candles were bullish too. Just my opinion.
+1 Reply
@miket56, you definitely could be right. The H&S i was talking about did not form. However, we are still below resistance around that 2798 level and I still think the trade is good. If not, oh well. The point being that we have very defined risk (short here with a stop 10 points higher at 2705) with a large potential upside on the target (at 2750-ish).
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miket56 TradeWithAdam
@TradeWithAdam, Thanks for the reply Adam, good luck.
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Everyone's short got burned
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@gvoommen, overnight shorts on Thrusday night, yes. But we are back to where I put out the idea to short on the futures. If we push above that line to 2705, I'm out and moving on!
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Agreed. I have a similar picture and went short today.

+1 Reply
Expect the unexpected
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If something is so obvious it will never happen. So I expect a ramp considering a $400 million inflow
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