#202431 - priceactiontds - weekly update - sp500 e-mini futures
Good Evening and I hope you are well.
Quote from last week:
comment: Low of the week was 5432 and I wrote 5400/5450, +121 points. For most letters/rooms/subscriptions you have to pay good money for those outlooks, if you even get them this accurate. Hope you made some.
current market cycle: Bull trap triggered. Probably forming a trading range first before we get to the bear trend. First guess for the range would be 5300 -5600
key levels: 5400-5600
bull case: Lower lows and lower highs. Bulls stopped the selloff where they had to and their last bull trend line before only the one from the covid low remains. I do think the two legged correction is good for now for the bears and a bounce is due. Since both sides have reasonable arguments, I think it will come down to earnings. If the mag7 report good and their outlook stays good, we bounce higher. If they fail or some fail, we move sideways. Slightly favoring a higher bounce to form a proper channel downwards. Decent chance bulls might close both bear gaps.
Invalidation is below 5400.
bear case: Bears see another minor pullback which could not even get to the daily 20ema at 5640. They want another strong leg down to 5300 to make it clear that the bull trend is dead. It’s not out of the picture that they get it. Probability wise, it’s more reasonable to expect the bull trend line to hold and at least go more sideways before another leg down. Issue with that is, that next week we have so many news that will have a big influence on longer term traders, that we will most likely go higher than 5500 or lower than 5400. For bears it’s a really bad short right at the big support. You can scalp short on strong momentum again but bears will likely wait for a pullback before they try again. My preferred path forward is the bear channel on my chart below.
Invalidation is above 5600.
outlook last week:
→ Last Sunday we traded 5553 and now we are at 5499. Low was 5432. Bearish was right. Pullback was right. Hope you made some.
short term: Neutral. Both sides have valid arguments. Will make this dependent on earnings and will only do scalps for now. Market has to form a better channel if it wants a sustained down move.
medium-long term: First target for this section was 5450 and that will be hit over the next days or 2 weeks. After that is 5300 over the next 3-8 weeks and 5000 could be hit again in 2024. —update: 5450 was hit mid July. Next comes 5300 over the next 2-6 weeks.
current swing trade: Took profits on the swing short from 5700. Will add again above 5550.
chart update: Added my preferred bear channel for the next weeks.
Quote from last week:
comment: Increased volume on the down move is telling you that this one is the real one. Over the next months, market will test down to the bull trend line from 2023-10, which is also where the weekly 20ema is. Friday we stopped around the smaller bull trend line and it’s a decent place to expect some pullback before we be on our way to 5400/5450
comment: Low of the week was 5432 and I wrote 5400/5450, +121 points. For most letters/rooms/subscriptions you have to pay good money for those outlooks, if you even get them this accurate. Hope you made some.
current market cycle: Bull trap triggered. Probably forming a trading range first before we get to the bear trend. First guess for the range would be 5300 -5600
key levels: 5400-5600
bull case: Lower lows and lower highs. Bulls stopped the selloff where they had to and their last bull trend line before only the one from the covid low remains. I do think the two legged correction is good for now for the bears and a bounce is due. Since both sides have reasonable arguments, I think it will come down to earnings. If the mag7 report good and their outlook stays good, we bounce higher. If they fail or some fail, we move sideways. Slightly favoring a higher bounce to form a proper channel downwards. Decent chance bulls might close both bear gaps.
Invalidation is below 5400.
bear case: Bears see another minor pullback which could not even get to the daily 20ema at 5640. They want another strong leg down to 5300 to make it clear that the bull trend is dead. It’s not out of the picture that they get it. Probability wise, it’s more reasonable to expect the bull trend line to hold and at least go more sideways before another leg down. Issue with that is, that next week we have so many news that will have a big influence on longer term traders, that we will most likely go higher than 5500 or lower than 5400. For bears it’s a really bad short right at the big support. You can scalp short on strong momentum again but bears will likely wait for a pullback before they try again. My preferred path forward is the bear channel on my chart below.
Invalidation is above 5600.
outlook last week:
short term: Bearish but also expecting a pullback first. Same as dax.
→ Last Sunday we traded 5553 and now we are at 5499. Low was 5432. Bearish was right. Pullback was right. Hope you made some.
short term: Neutral. Both sides have valid arguments. Will make this dependent on earnings and will only do scalps for now. Market has to form a better channel if it wants a sustained down move.
medium-long term: First target for this section was 5450 and that will be hit over the next days or 2 weeks. After that is 5300 over the next 3-8 weeks and 5000 could be hit again in 2024. —update: 5450 was hit mid July. Next comes 5300 over the next 2-6 weeks.
current swing trade: Took profits on the swing short from 5700. Will add again above 5550.
chart update: Added my preferred bear channel for the next weeks.
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