S&P 500: Drop later this week

SP:SPX   S&P 500 Index
With the technology sector getting weaker there is a growing risk of a decline of the "S&P 500" in the weeks ahead.

On April 26 I had outlined two different scenarios. The blue scenario was the long-term bullish outlook where the index first drops and then rises with more strength higher. The second alternative outlook was colored in gray where the market first rises and then fails at channel line resistance and drops hard. So far this scenario played out with the decline yesterday, therefore I now flip bearish .

Trade active: Short entry 2726
Short minimum target 1: 2635
Short maximum target 2: 2518
Stop loss: 2769

Comment: It's possible that May 15 was the low at 2701.91 and that the uptrend which started on May 3 is not broken and continues far higher to beyond 2800.

I'm giving my bearish idea two more days to play out (Wednesday, May 23) before I switch back to being bullish. The odds that the market declines strongly this week have decreased though, due to the strong gap higher at Monday's open. Therefore I move my recommended stop loss for the short from 2769 to 2739.

There is now a new open gap between Friday's close and Monday's open. This gap could get filled during this week and this gap is also the reason why I'm giving my bearish idea more time to play out, unless the stop loss gets taken out in the meantime.

I think the move higher Monday was among other things a positive reaction to the trade talk news from Sunday (the trade war truce).
Trade closed: stop reached: The recommended stop loss mentioned yesterday at 2739 got hit today, with the S&P 500 moving after the cash open to above 2742.

I created a new bullish outlook, which implies that future dips should get bought. Ideally there is going to be a pullback soon this week to the open gap around 2719-2720 before the S&P 500 rallies even higher far above 2743.

Trade active: It appears as of today that the decline took more time to play out and that the start of the decline shifted from the end of last week over to this week.

I opened two new short positions.

Short no1 before the close at 2725 on May 23

Short no2 after the open at 2730 on May 24

Volume is so anemic. What does history say about such a low volume market? Will it fall on its own weight?
ChartArt ltiftv
@ltiftv, I don't work with volume as information at all, only with price. I always remove volume from my charts, because it can be very misleading. Therefore low volume does not mean anything to me.
+1 Reply
ltiftv ChartArt
@ChartArt, Thanks!
laegtcl ChartArt
@ChartArt, it depends the side you're working, obviously the volume confirm the move, but that happens next of my_decision
Any update? Thanks!
ChartArt gurra_s1
@gurra_s1, The decline is very slow, which makes things hard to predict going into next week.
gurra_s1 ChartArt
@ChartArt, You think it will go up today? The cfds of spx 500 are at 2732 already
ChartArt gurra_s1
@gurra_s1, It appears that the decline took more time to play out and that the start of the price move downwards has shifted from the end of last week to the middle of this week.

There are now more bearish signals as of today that the decline might have begun two days ago on May 22, 2018 with the failure of the breakout on that day.

gurra_s1 ChartArt
@ChartArt, Thank you for the update. I was long from yesterday and closed it today. Now I shorted at 2725 with a stoploss at 2745.
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features Pricing House Rules Moderators Website & Broker Solutions Widgets Charting Solutions Get Help Feature Request Blog & News FAQ Wiki Twitter
Profile Profile Settings Account and Billing Get Help Ideas Published Followers Following Private Messages Chat Sign Out