Technician
Short

SP500: Time to Short Stocks!

INDEX:SPX   S&P 500 Index
3626 34 39
Update: Targets Hit
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I discussed in earlier posts why i am bearish on equities , hinting the federal reserve easy liquidity withdrawal and many technical conditions. If we just ignore all the warning signals on momentum indicators and the major bearish divergence on breadth indicators. One more major warning signal that cant be ignored IMHO is the breakdown of high yield junk bonds, which have been always a reliable indicator for stock market direction.

JNK             has broken below its long term trend line from 2011, in addition to successfully recording a new lower low. Add to that the major bearish divergence on Breadth, stocks above 200-days SMA .

I am shorting this market, looking for a meaty correction.

Best of Luck , join me at https://twitter.com/thefxchannel
Also at my Facebook             page http://www.thefxchannel.com
My best regards,
Technician

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Trading Criteria:
1. Trades are taken in two units
2. First unit would be closed at first target
3. Stop loss is then moved to break-even
4. Second unit would be closed at second target
5. Note that If 90 percent of first target is reached without triggering entry, trade is cancelled
6. Remember: Losing is a main part of the game
My trading ideas channel https://telegram.me/technician_forex_trades

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Sorry for the title, should be : Time to Short Stocks!.**
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Very good insights I have been short for a bit.
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Good luck
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Thanks for this post.
+1 Reply
Could this analysis extended to SPY? I mean can I go short on SPY too? if so, would the targets be around same level as the SPX? Thanks for sharing
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Technician TOP ZaloRostam
SPY and SPX are basically the same. The SPY ETF tracks the performance of the S&P 500 index as closely as possible, and thus move in tandem with the SPX.
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Why short? Better buy this SPXS. Or indeed the best is to buy this: EDZ. Because if US equities go down and dollar go up emerging markets equities will go down even more. Am I right?
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Technician TOP andrius.lietuvis
Emerging markets already under-performed for the past years. If stocks move lower, it will probably be global sell-off.
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Panic sell, panic sell!
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Nice use of JNK & 200 SMA as leading indicators on this, The SPX has already hit a critical selling area on my charts. The Dow is slightly lagging in price but timing will be the same. My figures have a minimum drop of approx. 21% which will be savage, The 55 RSI divergence on the Dow peaked as far back as May 2013 and has already left the station:) Thanks Technician for the post.
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The correction is long overdue. Seems like we're going to 1900.
http://www.marketwatch.com/story/what-to-read-into-the-junk-bond-divergence-2014-10-01?siteid=yhoof2
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Hi, do you still think prices will ever go back to 1990 before going down or would you advise to go short now? I'm seeing the SP500 going down at the moment...
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Update: Hit First Target
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did you get chance to hop on this trade?
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Technician TOP HamedAghajani
Not this one.. I already had other positions open.
+1 Reply
Good call! Based on technicals, do you think the s&p could break its ~1800 support line? Im gonna be watching the jnk charts from now on... cool correlation i didn't know about until this post!
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Technician TOP prof_snape
Yes i think sp will break lower, even if we see an upside bounce. Keep posted, will be posting another important study soon.
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prof_snape Technician
Ok, will be watching. Thanks,
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Smarttrade1st Technician
thank you!
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Technician TOP Smarttrade1st
Ur welcome mate..
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Well done!
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Thank you mate
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Hi technician ! what is S5TH INDEX? rsi??
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It's an index that shows the sp500 stocks above their 200 days simple moving average. If the number of stocks above the 200 SMA increases the index rises, if number of stocks above 200 sma decreases the index falls.
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gunne821 Technician
Hi technician, great call, but do you see a second leg down still coming now? Markets behave like these last couple of weeks didn't happen.
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Well, we will probably rally further, maybe test area near 2000 again.
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gunne821 Technician
Thanks, keep up the good work.
+1 Reply
shibbitz Technician
I know you are already short, would be great if you could do another updated chart on your targets and time frame, your last one hit it on the head. would be interesting to see, and much appreciated
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I will try to do so as i see another short signal. Thank you
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shibbitz Technician
great, cant wait to see it
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Cfsqbwn. Technician
Great!!
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Hey technician! Was wondering if your still gonna be shorting this market? How do the technicals look to you?
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Technician TOP prof_snape
No no no.. :) I am neutral now. There is no short trigger signal for me. If i see one i would surely share it :)
+1 Reply
prof_snape Technician
Ok :) Thanks mate
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