timwest

SP500 SP1! Monthly PATTERN suggests sell in December

CME:SP1!   S&P 500 FUTURES
a year ago
The S&P500             has a pattern that is extremely interesting.

I've devised an indicator I call Range-Movement, which I say Range-Move and shorten to RgMov on the chart below. It measures the way the market is moving and compares ranges to ranges, side-by-side. It also gives very interesting indications of TREND and sometimes more importantly it shows the level of "psychology" in the market.

Oddly enough, all of these 5 signals allows the market to fall a little in the current month (September 2015), but then rebound in the next two months into November.

So, we can say with decent probability that we can rebound after this month but sorry to say that we can decline this month too. At the end of September we can look for a bounce since in each occasion there is a bounce after the next month ends.

The way to trade it is to buy the end of September, and then hold for 2 months. Then trade the breakout of Novembers range. Buy a new high over Nov's range or sell short a break down through Nov's low.

The average winning trade here is quite sizable:
1a. Sold 459, covered 476. 4% loss.
1b. Buying over 3rd month high gets you long in March 1995 for the bull market. 100%+++ gain.
2. Sell short under 3rd month low gets you short for a major bear market into 2003             = 38% gain.
3. Sell short under 3rd month low gets you short for a major bear market into 2009 = 45%+ gain.
4. Sell short under 3rd month low (November 2015)....

So, sorry for the "heads up" this early. But just wanted you to see what patterns the market is revealing to me.

Tim
a year ago
Comment: The pattern is unfolding according to the pattern. A rally happens after the first washout to a 24-month low. The rally is setting up quite a level of optimism from which a major move could happen, as per the pattern.
a year ago
Comment: S&P500 Fell under the November low on Friday, December 11, 2015 triggering a sell signal. I realize the market is deeply oversold and right into old support levels but in case you had missed the setup, I am reporting it here. What I would recommend is to get started in a position and then work into the balance of it over time and use a stop over the November high.
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BallsOut
a year ago
posted this on my bathroom mirror :)
+2 Reply
This is amazing...Thanks a lot Tim.
+2 Reply
keshavreddi
a year ago
Tim, what low levels you are looking at September to start buying?
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timwest PRO keshavreddi
a year ago
I'll watch VIX very closely. The drop from 50 down to 25 in VIX alerted me to severe complacency and set the stage for the selloff Tuesday, September 1st. Watch VIX. If it surges too fast, then you buy, risk 5 points in VIX and exit long after VIX falls by 5 pts. When markets are crazy volatile, VIX is the easiest way to navigate the entries and exits. The 2nd way is to watch spillover action from foreign markets and then look to cover when the European markets close (around noon EST) for trading for the US session. Those are some of my ways of looking at the market.
+1 Reply
keshavreddi timwest
a year ago
Thanks Tim for the details, this is really helpful.
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IvanLabrie TOP timwest
a year ago
Came up with this using our local coder UCSGEARS' indicator, snapback, based on your idea Tim:

snapshot
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timwest PRO
a year ago
The RED BOX is the amount of time it took the market to climb back to where the signal (bearish signal) happened.
+1 Reply
This one should give us an entry soon. I see a retrace for a couple more days before the big selloff take #2 resumes.
+1 Reply
2use IvanLabrie
a year ago
Do you have a chart for this idea of yours ?
+1 Reply
IvanLabrie TOP 2use
a year ago
Tim posted a few in his chatroom, I haven't published any updated S&P500 ones for now, but can do a quick job. I'm mapping it for USDJPY trades.
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Everyone is feeling great with AMZN up so much! The market only goes up, it gives money always. ;-)
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timwest PRO Crinklebine
a year ago
I think Euphoria has come back to the market with the new highs in many stocks, the rebound in China and continued low interest rates. The side-show which is the crazy Presidential election candidates are very much a distraction whereas before the constant discussions about raising capital gains tax rates was a real problem for the equity market, as I saw it. The moves against stock buybacks by Clinton is another problem for the market going forward. The moves against corporate takeovers was a major problem with talks about eliminating interest deductions for debt created for buyouts. These are major, major issues going forward which put a major glass ceiling on prices in the long run. I haven't heard as much lately about the valuations on private equity deals in the pipeline to go public, but they are a major bubble, bigger than any bubble ever seen in private equity valuations. Some will argue that those private equity valuations are the 'new thing' because of crowd funding and internet distribution of securities. The world is indeed getting to be a smaller place with better, faster, higher quality internet connections.
+3 Reply
Crinklebine PRO timwest
a year ago
The market has been going up since March 2009. That is over six years. Uber with a 70 billion or so valuation seems very high. We do seem to be entering the age of the Megacorp now. If you don't have a microprocessor, operating system, 1 billion registered users, network of fulfillment centers and an electric car you are not a player. ;-)
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timwest PRO timwest
a year ago
The price of Square fell by 50% from its last private financing round, so private equity valuations are certainly going to get some attention.
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I think we will rally into November and Decembers (Santa rally) then offer up a big selling opportunity at the end of December
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It's following the pattern as prescribed by Tim.
+1 Reply
muslim_islam14
a year ago
spx
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sandeep9598
a year ago
Thank you Tim!! where do you see market heading now? will it make new highs with all this bad reports coming out for the quarter. bad earning (few sectors), weak employment, China trouble, etc... hack even FED cant raise the rates to .01% which confirms that we are running on weak economy? please share your view. :)
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timwest PRO sandeep9598
a year ago
There are so many comments to make. What I have drawn here is a simple way to capture the pattern of price action and that is to exit at the end of November and then wait for the November range to break on one side or the other and go with that momentum. The news is always troublesome with concerns about weak and falling S&P500 earnings (only up because of buybacks), strong dollar, terrorism, nerves about holiday spending, a weak housing market, and many other factors.
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Victor.Y.F
a year ago
It's a little be early, I say it's a morning call. Let's find DXY top and EURO bottom first. It'll drop to 1600 and a nice buy there.
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keshavreddi
a year ago
Hi Tim, is this pattern still valid?
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Genghis
a year ago
Nov lows taken out... time to double up short then?
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IvanLabrie TOP Genghis
a year ago
We have a huge weekly downtrend in S&P.
snapshot
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