SP500 Short Trade Parameters
Bottom in place at 1820 for 2/3 weeks only. Then it can be challenged/breached.
Next few weeks mapping
28Oct Top: 1980/2000
31Oct Close: 1966 (small weekly shooting star)
Nov W1 Range: 1970/1890
Nov W2 Top: 1970
Nov W3 Dec W1/2 Crash: 1650 BUY! Potentially 2550 in 2017.
Trade:
Short 1980/1990 Stop 2030
Buy 1850 Dec Puts.
Take Profit: 1650
Rational:
1 – Fundamental: The tepid growth can’t drive the rally further from these high grounds. A Decent Reset is in order.
2 – Fundamental: US QE Tapering, Nothing coming from ECB that the market liked.
3 – Technical: Rally 09 = Rally 11 in percentage ~100%
4 – Technical: Rally 11 Supporting line clearly broken below.
5 – Technical: Correcting 38% of Rally 11 is in order (That is 18% down from September top) – 1650 target
6 – Technical: The 125d EMA has just turned negative 10d ago, it has called for large corrections in the past.
7 – Relative Considerations: Rates pointing lower, Credit unable to tighten further, Small cap (R2k) unable to perform for a while, DAX Close to bottom and unable to jump so far, Nasdaq/Apple Capped here..
7 – Game Theory: No better time for a crash than when the least Expected. We had 5 Santa Claus rally in a row. I bet this year is different.
Note: the correction in 2011 was also one that corrected 38% the previous move up from 2009 (in weekly closes).
Strong Advise:
If you are not short: DO NOT STAY LONG Nov W3 to Dec W2
Little to win, loads to lose...
Next few weeks mapping
28Oct Top: 1980/2000
31Oct Close: 1966 (small weekly shooting star)
Nov W1 Range: 1970/1890
Nov W2 Top: 1970
Nov W3 Dec W1/2 Crash: 1650 BUY! Potentially 2550 in 2017.
Trade:
Short 1980/1990 Stop 2030
Buy 1850 Dec Puts.
Take Profit: 1650
Rational:
1 – Fundamental: The tepid growth can’t drive the rally further from these high grounds. A Decent Reset is in order.
2 – Fundamental: US QE Tapering, Nothing coming from ECB that the market liked.
3 – Technical: Rally 09 = Rally 11 in percentage ~100%
4 – Technical: Rally 11 Supporting line clearly broken below.
5 – Technical: Correcting 38% of Rally 11 is in order (That is 18% down from September top) – 1650 target
6 – Technical: The 125d EMA has just turned negative 10d ago, it has called for large corrections in the past.
7 – Relative Considerations: Rates pointing lower, Credit unable to tighten further, Small cap (R2k) unable to perform for a while, DAX Close to bottom and unable to jump so far, Nasdaq/Apple Capped here..
7 – Game Theory: No better time for a crash than when the least Expected. We had 5 Santa Claus rally in a row. I bet this year is different.
Note: the correction in 2011 was also one that corrected 38% the previous move up from 2009 (in weekly closes).
Strong Advise:
If you are not short: DO NOT STAY LONG Nov W3 to Dec W2
Little to win, loads to lose...
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