A BEAUTIFUL ROUNDING TOP FOR MR. TRUMP Index seemingly forming a nice, even rounded top (a reversal formation) What I particularly like about this one: It's nice and even It has been building for quite some time (4 months) It is built around a fresh historical high (this makes it more relevant) It completed yesterday a few points off the critical MA200 support It contains symmetrical breakouts (green circles) and breakdowns (red circles) on either side It completes at the end of the week and just before a major catalyst (elections)
MOMENTUM: DOWN-PAUSE-DOWN The index is down 7 sessions out of the previous 9 Of those, the past 6 have been sequential down days We are now approaching oversold territory (RSI <30) but not dramatically Expect some "breathing space" ahead of the week-end Expect a break below the MA200 and rounded top neckline (2,082) some time next week If the support is broken, expect further downside
NEXT LEVELS Potential rebound to 2,122 from here (+1.6%) Main support at 2,082 If broken, head straight to 2,074 and then 2,063
HOW TO TRADE Short SPY Buying SPY puts Buying VXX
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Index rebounded on Friday as expected. Stopped exactly on the MA200 (critical support). Tomorrow's elections to "make or break the index". Stating short for now - Make your bets.
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Index rebound overshot my target at 2,122. Direction and timeline as expected, however. Judging by the futures, today is when the index breaks to the downside. Expecting the S&P to trade below 2,080. Short index, long vol and long gold should pay.
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The index did break indeed to the 2,030 level, but only briefly and overnight and in a non-sustainable or properly tradable manner. Mr. Trumped did indeed trump us! Now look for an upside break of 2,193.81 (+1.41%) or downside break of 2,134.71 (-0.76%) for a gauge of next possible direction.