ChartArt
Long

Gangster's Paradise: S&P 500 Target 2300 Points After FED Event

FX:SPX500   S&P 500 index of US listed shares
519 3 11
Here is a very ambitious trading idea for the next weeks based on the hypothesis that 2100 points holds as support and there is no breakdown in the next days below this important key level.

Entry: 2100-2130
1. Target: 2200
2. Target: 2300            
Stop loss: 2100

Risk: up to 30 points
Reward: up to 200 points


Info:

US stock ETF "SPY" sees largest one-day inflows since January

The world’s biggest stock market exchange traded fund saw its largest inflow of cash since January on Tuesday, clawing back earlier outflows as investors sought to arbitrage price disparities between equities and ETFs.

"SPY" saw inflows of $3.5bn on Tuesday, the largest one day inflow of cash since January 21, counteracting much of the $3.6bn outflow experienced on Monday, according to data from Bloomberg, writes Joe Rennison in "New York".


https://www.ft.com/content/c07ffdf9-ea02-36a7-8b61-c47f9656808e


Apple stock soars toward best four day stretch in two and a half years
Comment: UPDATE: 1 trading day later

Everyone who wanted to follow this idea got a chance to buy today. The S&P 500 dipped back directly to my entry recommendation of 2130 which market the low of the day (SPX500 FXCM CFD).

Today I found this news piece. I don't agree with his view, despite the fantastic risk/reward I presented in my idea, but if you want to go really super bullish here is a good starting point:

Tom Lee: Buy stocks 'AGGRESSIVELY'

Veteran strategist Tom Lee of Fundstrat Global Advisors believes now’s the time to be putting money into the S&P 500, which is currently down 3% from its Aug. 23 high of 2,193.
“We believe this 3% pullback NEEDS TO BE BOUGHT aggressively,” Lee wrote on Friday. Emphasis his.

http://finance.yahoo.com/news/tom-lee-this-3-pullback-needs-to-be-bought-aggressively-160328184.html
Comment: UPDATE: 4 trading days later

All we got was some lame sideways chop and no breakout higher. If you went long at 2130 you had four days in a row the chance to close the long at 2150, but that's about it.

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I have too many sell signals today, therefore I see the S&P 500 drop ahead of the FED announcement this Wednesday back down towards 2100 points:

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Comment: UPDATE: 5 trading days later

The FED rate hike is finally behind us. I had strongly expected some shenanigans e.g. a fast stop hunting decline below 2120 if the FED does not hike, then followed by a sharp rally higher, but there was none of the usual stop hunting volatility for some odd reason yesterday. My worst case was a rate hike by the FED, which appeared yesterday more likely than it seemed 7 days ago: http://www.bloomberg.com/news/articles/2016-09-19/two-of-fed-s-own-primary-dealers-warn-shock-hike-awaits-markets which was another reason for my bearish last update.

Instead the S&P 500 advance is now confirming my overall bullish idea, which I published 7 days ago. Therefore the downside risk of a decline below 2100 is now decreasing and the upside opportunity beyond 2200 is increasing in the days ahead. We might get some test of the lows next week though after Trump and Clinton's first 2016 presidential debate on Monday.

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Some more info about Tom Lee who said 4 days ago: "Buy stocks 'AGGRESSIVELY'"

"To the biggest bull on Wall Street, the Fed’s restraint is one more reason that U.S. stocks are on their way to record highs. Thomas Lee, managing partner and co-founder of Fundstrat Global Advisors, has the highest year-end target for the S&P 500 among 19 strategists surveyed by Bloomberg. His forecast level of 2,325 implies a 7.5 percent gain from yesterday’s close."

http://www.bloomberg.com/news/articles/2016-09-22/s-p-500-futures-signal-more-stock-gains-after-fed-spurred-rally

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Comment: Update 25 days later.

The "S&P 500" is moving up by far slower than I had imagined. While it looked quite bullish on September 22 during my last update, since then the uptrend turned into a strong choppy trend. This trend moved sideways until my projected potential sell arrow, but now it appears the trend is slightly more bullish than bearish amid the higher lows and lower highs it made in the last days.

Here is a study of the volume profile created by FuturesTrader71 which comes to the same conclusion (the odds are higher for a breakout to the upside) as explained starting at minute 12 in his Youtube video:

https://www.youtube.com/watch?v=x1_BzdYq0RQ&t=721

Here is my chart updated only with the last daily prices. My original plan when we see the breakout seems to have been delayed, but it could still happen:

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I totally agree with your assessment. It's a one way market.
Reply
Chartart, what do you think about the bearish divergence at the RSI on monthly chart ?