Recent drop below Trendline support and Major Horizontal support at 4548 as well as Break below EMA 39.
EMA 39 acting as Resistance now. as well as down trendline (dotted yellow lines)
The run up in Nov-Dec 2021 was a pretty classic Wycoff Distribution as Green candles formed higher highs with smaller and smaller Buying volume. Notice that the Red candles started getting bigger and bigger and as they did the volume of the selloff increased.
Recent Low had one Large Red Candle with very high volume. This was quickly bought up as a rally ensued to the down trendline and EMA 39. I described this EXACT scenario likely playing out in another posted idea except that I expected the rally to occur over a few more weeks. Also notice the Doji candle of indecision with Lower and Lower volume on the recent rally higher and higher over last 4 days. This suggests less and less Demand again.
So, Less and less demand and interest in carrying higher prices while also meeting dual overhead resistance suggest lower prices.
Here we have a great setup for a SHORT in my opinion and I entered 2 SHORTS today via QID and SDS Long positions at $17.91 and $37.94 respectively.
I am expecting this to trade down to 4000 on S&P 500 which happens to be dual support of Horizontal support and MAJOR Trendline Support dating back to April 2020.
We need to watch Volume as it approaches these levels of support for diminishing sell pressure and increasing BUY Pressure. This occurring at support zones will suggest time to cover this short.
Trade what you see.
Trade active
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Covered my QID today to put capital to work in crypto again. Still hold the SDS. I think S&P drops further but the session today suggests we have alot of people buying these areas to expect a pop higher soon. Crypto market should have taken it on the chin today but it held STRONG for the most part and in fact pretty much ended the day UNCHANGED. There appeared to be alot of accumulation around BTCUSD around $36300 level.
Given the strong correlation of Nasdaq to crypto I decided to cover my QID position for a substantial profit and start putting money to work in crypto as I dip my toes in the water there again.
SDS position still on for now. Tomorrow I may cover because I often do not like to hold volatile 2X Short ETF positions over a weekend.
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SDS portion of trade closed. Rotated QID capital and profits into Crypto last night as described above. Glad I did because crypto is breaking higher today. Will put the rest of this SDS and profits from the trade in crypto today.
Total Profit was about 4% on entire portfolio on SDS trade and about 6% on QID trade. Now to capitalize on Crypto rotation...
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Atfer rotating into crypto LONG and then SHORT and booking profits on those I am now Neutral as I think both Stocks and Crypto have a small bounce here. Probable Retest of the 4463 level before dropping further. Lets see how this plays out. I suspect a bigger move later this week.
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What would it take for me to become more BULLISH on Stocks? We would need to break above HEAVY resistance @ ~4500 and then LINE in the sand @ ~4586. Until then I am a seller of rallies. FIRST Downside Target still 4050.
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So price advanced only t hover at 4463 ALL DAY as I stated in yesterdays Comment. Bulls really need to see that there was lack of follow through here. I expect that we MAY advance as high as 4500-4504 level with one last push higher before turning lower again. There does not appear to be much interest in this rally. Still expecting drop to 4050.
@gremic, Thank you for the comment. Definitely a Traders market lately.
Peterson
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Straightforward analysis, thanx. Negative divergences will take the lead now after years of being next to irrelevant imho. Positive divergences appear to be less and less forceful to the upside especially on the lower TFs within the last couple of months, which has been unheard of for years.
HoldAndChill101
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So to justify your point you choose 39 day which no one chooses.
eganon69
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@HoldAndChill101, LOL,....check ANY of my posts for the last 14+ years on here (Only been here for about 2 years) or Elite Trader and I have always used EMA 39. I have my reasons for its use. But if thats what you think I just cherry pick to suit my needs, then so be it. I really dont care. Move along and learn nothing. By the way if everyone is looking at the same info (EMA 21, 50, 200) they are all likely be on the same side of the trade and you have NO edge.