In short: right or wrong i will attempt a short at 2065 with pain stop 2090
Size 100%, I would lose 125bp if triggered.
Reasoning:
As an analyst I could just say: “bull as long as above 1955” which nobody could complain about.
So far, equities are either breaking out or respecting key supports. Objectively, the market appears bull.
But a few things make me have a bad feeling about the end of this month:
1) DAX has key resistance at circa 11,000 (but this is mid field and straight the max target could be 11700 in March).
2) For SP500 to reach what became obvious resistance at 2140 again seems a bit obscene.
3) In the US, some sectors are stuck at top and some can’t rally since a while now (real estate reached the top of 2007, biotech can’t anymore, utilities can’t anymore...)
4) The monthly ATR is 90 on the SP500 and the bottom was 1980... that gives 2070 as a stat cap this month.
5) We “know” Sp500 would be capped at 2115 vertically and 2140 mid march.... at current velocity, sp500 could do this in 2 days (too much energy for the space available above).
6) All the bears have capitulated.
7) Positioning: bulls are in again, bears are out... If market falls “nobody” makes money.
8) Many technical metrics back a short on midfield pivots. Let me know if interested.
9) Great trades are rarely provided from an easy stance, here reaching 2140 would be that easy trade... May not happen.
In essence, I have the growing feeling that 2075/SPX and 11,100/DAX will retain (key mid field resitance).
I can’t be sure and it is wise to only tell you to short if 2140 is reached but as a trader i will try:
Trade:
Short 100% ES Fut 2065 (which seems likely and imminent) with Stop 2090. (125bp risk)
