Recommendation: LOOK TO SELL SHORT
Current Trend: Up on all main timeframes, but overbought.
Strategy: Sell short a reversal week down, or a close below line 3 – first to happen.
Chart Setup: The S&P has moved sideways to up over the past week and it has gone further than I expected. However, I can't advise buying at these levels even if the price does continue a bit higher (I don't mind missing the move, but protection of capital is more important).
- It is still giving a negative divergence, from its overbought region on its Stochastic, and this is warning of a correction to come (it’ll happen when the market is ready and not a moment sooner).
Strategy Details: Sell short on a reversal week down. Or, sell short a close below line 3. (Line 3 is at 2524 on Weds 11th and it’s angling up by 3 pts per day thereafter), whichever happens first. (Note, a bearish reversal candle on Monday night did not break its low to trigger an aggressive short signal as per last week’s comments).
Target: I don't have a specific upside target right now, but for a correction, take half profits at 2510 and the rest at 2490 if reached.
Stop-loss: A daily close above the high of the reversal week down, or if shorting a close below line 3, stop is a close above 2552. From 2510 take partial profits and lower the stop to a breaking of its prior two-day high on the remainder.
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