BEI

Why does it have to be either a downtrend or uptrend?

BATS:SPY   SPDR S&P 500 ETF
406 3 3
Why does it have to be either a downtrend or uptrend?

- There is no mean reversion nor volume pikes indicating solid bottom for new uptrend), unless some kind of miracle solution steps in i don't see new highs.

- Even if markets are topping, I reckon this is more of a confused / mixed kind of market, there is as much as bullish than bearish signs.This is going to be tricky, so you'll have better chances on doing complete opposite of what you are used to for a while.

The way prices bumped 2 -3 times on previous resistance (two red arrows 50% fib) is a bad sign for correction now but not good sign for bulls on the long run either. This is neutral so ranging mode. On the technical side when i day trade and prices don't seem to react to 50MA, but seems to hug it instead (evolving around it tight candles), this means we'll have a choppy, ranging session. prices above orange line will confirm that.

In conclusion, this is a slow moving RANGING market looking to play trough the summer. Best way to play is same way in day trading, play the range, don't be greedy and pay attention to volume . Be patient.

If you want to short it wait for Bollinger Band + rebounds, priority on the weekly period . GL.
BEI
3 years ago
Two red flags are suggesting major top:

- Too high valuations of stocks fundamentally unjustified (P/E ratios is one example) = Prices are unjustified
- Margin debt levels

It's just that market will continue to go up until it doesn't anymore, momentum players and HFT pushing prices higher regardless of macroeconomic factors. If i am right, prices should react aggressively to resistance and come back lower, confirming distribution channel and players acting in this market, confirming unsustainability of this break of decade wedge. From the technical point of view, although prices have broken trough this wedge, i thing it's just and enormous bull trap, it has historically happened twice and prices experienced correction.

- Another factor in favor of this scenario is the presidential election cycle (which favors peak this summer and correction into fall of 2014), and telling us market won't sustain breakout until 2015/2016. but i am not an expert on that subject so i am not considering anything serious here. Although this is very interesting since it concurs with contraction Fibonacci spiral theory that suggest price correction in 1987, 2000, 2008, 2013, 2015?, 2016? (13-8-5-3-2-1), and 16 being the supposed end end of cyclical bear market in order to begin a new bull market? aligned with this presidential election cycle factor...but that is another story and purely experimental. But since i am speaking about it i prefer to measure cyclical from bottoms and not tops. GLD could be good example if we get major bottom this year. That would be historical rebound of the metal in 2000, 2008 and 2013 making the contracting Fibonacci spiral an even more serious factor to consider in the future from my point of view.
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algoteam
3 years ago
very nice :-) but... if your right, than market will prob make new high with a divergence on the weekly... that would be a major short sign... till then, sideway seems righr
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