The only thing you need to watch for in the S&P500
Right now this looks like the simplest way to look at the S&P.
The 50 Day moving average + the channel developing from April - now
A *close* under yesterday's lows breaks support, otherwise we trade higher. Makes sense?
Note
We're consolidating in a triangle that'll eventually break up. Here's what I'm seeing in terms of possible outcomes based on *my* assessment of probability:
1) Most probable outcome (IMO):
Or... 2) One more major fake out before reversing:
Or... 3) A slow grind and a breakdown:
I think the 50 DMA will break down as some point. But the evidence still points to continued support at these levels. At the same time, I think we have plenty of reasons to stay cautious. I cannot find many stocks that have intriguing r/r set-ups, hence my heavy cash position currently.
I've been almost entirely in cash since Thursday. I've had a 7% drawdown in the last week which is fairly high for me in a short period of time. This drawdown mostly occurred from trading intraday and accruing a lot of small losses. I view the markets now as choppy and difficult to trade. Targets need to be modest and stops need to be wide. Hence the poor risk/reward.
Here's a look at the S&P 500 stocks above the 50 day moving average:
There are certain supports where I'm extremely aggressive in going long. This is one of those where I am just watching on the sidelines and waiting for more clarity.
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First wave down off the purple level. Now this is the real test for a bounce:
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Notice the respect given at the 3340 level and bouncing off it - the same price where the triangle meets. That is now a good reference point
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This is bearish... Watch the 1hr close and 4hr close in about 15 minutes
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The S&P broke out of the triangle. If you see above in the comments my ("Most probable outcome IMO") (1) is currently in play.
3425 is the next stop followed by 3470s. 3350 is the key support from here that has to hold:
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3425 reversed the S&P and we're now back under 3350. While there's still support at 3325, the ice is getting thinner and thinner. If the S&P CLOSES below the 50 day average on the daily time frame, here are the levels I will be watching on a longer term, daily basis. :
The green level is a possible reversal zone that converges with the 200 day moving average. The red level is an extreme support zone that would likely result if we see a flush in the market (heavy quick selling). I want to be a buyer at these zones and a seller INTO those zone IF the 50 day average gives way (meaning a daily CLOSE below it). Notice my emphasis on CLOSE - the close is what matters.
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intraday head and shoulders now:
Bearish
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Firmly above the 50 day after today's close and now grinding at the lower trendline. Here are the levels I'm watching: Above 3425 is bullish.
I've been focusing entirely on single stocks. When the S&P is doing what's it's been doing, it's best to look for patterns that are breaking out and have relative strength.
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3425 was reached first as expected but 3375 was blown out over Trump's tweets. We're now back above 3375. These will remain the key levels the market needs to break above or below to tell us its likely direction.
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