On April 26 I had outlined two different scenarios. The blue scenario was the long-term 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 .
Short minimum target 1: 2635
Short maximum target 2: 2518
Stop loss: 2769
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).
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.
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
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.