S&P 500: Maximum fear priced in. Dodd-Frank repeal rally is next

The "S&P 500" did not close Tuesday at the lows of the day and also closed above the EMA 50 on the daily chart. The "Russell 2000" small-cap company index ended Tuesday unlike the large-cap US stock indexes with a higher close. And US President Trump floats a complete repeal of the Dodd-Frank bank regulation act, which is very bullish for bank stocks. All of these pieces together allow the US stock market to go higher at least for a short-term bounce to test the upper resistance.

Long entry: 2340-2349
Stop loss: 2335
Target: 2365-2380
Risk: 5-14
Reward: 16-40

The ideal entry price for my original bullish idea was reached yesterday:

הערה:

Here is what happened.

I had published my chart on Wednesday before the spot market opened. The market opened Wednesday above the 50 day simple moving average, but then bears won the trading day and the index closed below this key line in the sand. Then on Thursday the S&P 500 opened bearish below the Wednesday close (and below the 50 day SMA) and proceeded to close very bearish at the lows of the day.

The market was closed on Friday due to Easter and so the S&P 500 went into the weekend with the start of a bearish trend - highlighting a potential total mean reversion of the Trump rally; instead of a minor bounce higher supporting the overall uptrend, which I had anticipated for Thursday.

This strong decline on Thursday surprised me. But as I learned in hindsight using backtests, closing below the 50 day SMA is one of the most reliable moving average based short signals. It is more reliable for going short in the short-term than for example going short when the S&P 500 closed the day below the 20 day or below the 200 day SMA.