This post is rather an observation, not yet really a big trade idea. Of course if you feel like, you can trade based on it, but keep in mind there are not yet firm trade signals to rush for.
The charts are: 4 Hrs Ichimoku, 4 Hrs with Heiken Ashi, 1 Hr Ichimoku Daily chart I did not attach this time, as that is clearly bullish, with lot of support levels lower and with no real chance for a break or a bearish reversal.
The current bullish move from the lows was pretty impressive and very quick. SP500 is about to reach the top of the trading range. What we have to start watching now is where it will print the next high close to 1900, well actually if we can see a higher, or a lower next local high compared to the previous all time high on the 4 Hrs time frame. Anyway I would not be surprised if we see some correction today down to 1865-1870 levels. Slow Stoch is overbought and turning lower again after this strong bullish march, and we may see the first red Heiken Ashi candle as well. 1865 is important as there is the Kijun line too. If price can not pop up from there again gaining back the bullish momentum, then as you can see on 1 Hr time frame it can easily become more than just a 10-15 points pull back. With a 1 Hr chart Kumo break and additional Ichimoku sell signals it could be hit lower to next possible support of 1850-1855.
The difference now compared to previous breakdown in early April is that the 4 Hrs Kumo is pretty far below price and it is thick enough, so very likely even a bit bigger correction would be bought first ard 1840-1850.
This means even if we see some sell signals, either position sizes should be limited to half unit on shorts, or the stop loss has too be very tight. Be cautious with bearish trades, but be a lot more cautious with bullish bets! :-)
Generally I like to sleep well, so what I like to do here is to open very small outright short + buying some Put options and Put spreads for June maturity. Who knows, maybe Puts can work a lot better in time with less stress. And as you may have already realised I am kind of strategic bearish for equities at these levels, so I rather look for short opportunities.
p.s.: the reason I have been looking at 1 Hr time frame recently is that since equity indexes are trading in a wide range, it is kind of too late to get proper and confident signals on 4 Hrs and on daily time frames. 1 Hr chart supports swing trade ideas better. And as you see, Ichimoku works on all time frames. Of course the best is when you have multi time frame Ichimoku signals which stregthen each other.
Comments
Kumowizard
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SP500 only retraced to 1860 (1855 was not met). Price popped from 100 WMA on 4 Hrs chart. Kumo is still lot below price and thick enough. Move stop on existing shorts down to 1875. Actually indicators on charts have become a bit mixed making it harder to read possible moves in short term.
Kumowizard
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Unfortunately there is no realtime VIX chart here, but front VIX futures (May maturity) just gave a Kumo breakout buy signal on 1 Hr time frame. Bigger probability now to see more selling pressure on equities.
A-shot
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Thanx for the update!
Kumowizard
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Basically the original idea of reaching 1870 was matched yesterday, but intraday price quickly spiked again.
In case one of the next candles on 1 Hr chart could close and stay below 1875, then bearish momentum will have chance to accelerate. Support levels, which can be our retracement tgts are obvious:
- 1855 (on daily both Tenkan and Kijun is there, on 4 Hrs Senkou A is there, which is the top of current cloud at mom)
- 1845 (Daily trendline + 4 Hrs cloud bottom, and horizontal support
Daily Slow Stoch may give a sell signal soon, but MACD still points up, and daily Kumo Cloud is thick. On 4 Hrs we may see a weak Tenkan/Kijun bearish cross soon.
I still think in case the correction trade idea works, 1855 is achievable, but 1840-45 will be again protected by bulls.
I bought bearish Put option spread 1850 / 1790 for June maturity at 14 points. It has time to work out until June. Max risk is the 14 points, and max possible profit is 46 points / one E-mini SP futures contract.
The initial stop for the 0,5 trade unit outright short is at 1886.
A-shot
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Current geopolitical tensions seem to lead markets lower. Despite beating earnings, Facebook, Zynga, Pandora Media, Yandex all went down the hill...which is a pity as they beat on both sides, and if not for the Ukraine stuff Nasdaq would end up 1% or higher. Still, looking at my prediction on Nas100 it seems to be within the pattern...so i dont know now if the market is within the pattern, or geopolitical events happen on schedule :\
Kumowizard
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My major problem here is that geopolitical tension seems to lead mkts, but in fact doesn't really lead. I mean investors clearly do not care as much of this Ukraine risk as they should. I think the problem is a lot more serious. Not the possible war is the question here, but rather the whole situations effect on real economy, espec for Europe. E.g. thats why I don't really understand how EUR can perform so well. How can it be a kind of safe haven now, and USD behave as a risk off ccy.
A-shot
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Indeed. But see, we had 6 days of gains, from the lowest line to the upper line. As soon as it touches the upper line it went down from there...and i mean down like1% down on things that were there all along (Ukraine tensions did not suddenly happen yesterday)
tradingview.com/v/rojDCc3K/ (extend the lines and you will see what i mean...i will post an update to this soon)
And moreover, it lead the stocks that reported quite better than expected from green to red. So i wonder, what could have possible lead this as there was nothing new, nothing that much of a concern. i was monitoring europe indices at the US open time - all went down in parallel to US indices, then back up....after being already 1% up! Today they are down again, and all this has only Ukraine/Russian to blame, as nothing else is of the same scale.
Kumowizard
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Yes. At leat that is the reason to blame at mom. In general I think only technicals matter. Maybe after 6 days in a row these indicies simply just became overbought. U know how the media, talking heads, etc. work. They can always find the proper reason what caused the buying or selling... after it happened :-). In fact no one ever knows what is really behind the scene. There is always some kind of trigger, but the weight of move is influenced purely by the complex psychology of mkt players. For example, what has really changed in Ukraine situation during last 7 days? Nothing. The question of troops moving on and off is really a short term thing. So is the Geneva agreemen. The depth is a lot more complicated and how serious the effects on economy will be is kind of hard to predict. But in short term mkts only move on very short news flashes. I believe the bigger, the more complex and more leveraged global financial mkts are, the most shortsighted they become. Market doesn't have a memory (thanks God I have we as individuals have), that's one reason patterns occur again and again, and it always surprises most of people.
A-shot
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I am actually bouncing here and forth between the two. Is it media and analysis that tried to find a reason, or is it us who, if we look close enough, will always find a pattern (there are so many i still learn new ones here). Why i still give credit to the technicals is that at times when i do manage to spot a resistance or a support level on Any, note any grain, once it breaches it spills or runs up. I cannot avoid that fact, and for this i give more credibility to technicals.
Kumowizard
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Sell 0,5 trade unit. Size up in case px breaks below Kumo on 1 Hr. European indexes (espec DAX) trade like hot potato. I think SPX will follow.