SP500 - SPY - Daily - Forecast Sell & Buy Zones

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I created this on Friday to publish in a future issue of a new "online newsletter".

You can see that "earthquakes" often have after-shocks as seen from the January down-spike and the March-April smaller tremors. I would expect that same this time. The immediacy of the withdrawal of fear from the market is dramatic and unwarranted from the perspective that I have about the market.

With VIX             retreating dramatically and with prices back up to old "sell zones", I see this as an ideal short entry location. Target the lowest highs at the 187 level initially and we shall see how it acts when it gets there.

Tim 3:12PM EST Monday, October 27, 2014 SPY             195.86 last
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Ye'13 i assume is year end? If so, why does it have that significance of having the line up? Or you wanted to show that 2014 ends with 0 gains?
YE= Year End. Just a reference point. It was an important level because the market turned down on the year at that point. It destroyed confidence and flushed out some weak longs, in my opinion. And yes, I think the year could be flat. Did you see the links that I posted with this chart? My forecast for this year from the beginning of the year.
2use timwest
Yes i know the previous forecasts, but if the price does not clear the previous top, it either makes a lower low, or a double top, i see a possible minus as well ...but recent news are pretty bullish with all the data coming out. i should have paid attention to the dark square in january - now i know why YE is outlined
With the recent action, the buy zone can come up a little bit, but we are running into the "pushing on a string Economic theory conundrum" here with Central Banks aggressively easing to get the economy going. Crude oil is telling you that the economy is under pressure despite what is happening in the stock market. France and Sweden have negative interest rates to try to stimulate a dead economy. So, this is a good time to put on hedges for any long-biased portfolio. This is a great time to sell call options "at the money" for 6-9 months to increase income and provide a bit of downside protection. There are many things you can do here to actively manage your portfolio.
2use timwest
string or strong? Im amazed myself with this run, but i felt japan is posed for a run and added a small portion yesterday...wish i had added more. Is ebola out of the woods? As it laid a hefty hand on bringing the markets down, did it just get brushed off completely? We're looking for new highs for the markets in less than 2 weeks after a 10% correction that did not happen for a year or two... VIX sits at a low now so i wonder if it is too much confidence?
+1 Reply
Pushing on a "string" - The Central Banks are trying to push the economy but it isn't generating the typical economic response.... Hence the observation we are "pushing on a string".
+3 Reply
It's ahead of itself, the way I see it. The market just needs to rally enough to create the belief and attitude that "all is well" and "buy every dip" and that the "stock market doesn't matter".
+3 Reply
2use timwest
That for the clarification! I get it now :) About "buy every dip" - is this only a bull markets rule? I know shorting a bear is worth the while, but when bears dont happen in a streak either, or do they? Whats the strategy that works best in a bull trend as to your experience?
Every time the bull or bear market is different. We all learn to find patterns and then we change our behavior a little. So, the market cycles change a little each time. I just hope to know what everyone thinks and then figure out how the market will move to confound that opinion.
+2 Reply
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