S&P 500 Due for Correction - Technical Take
By Technical Analyst Colin Abrams
Recommendation: LOOK TO SELL SHORT
Current Trend: Short-term up but overbought. Med and long-term up.
Strategy: Sell short on the next reversal day/candle down, with caution.
(Daily Chart S&P500 Index)
Chart Setup: The S&P is looking like another day or two up at most and then a sizeable correction to come (as drawn in).
- Its short-term Stochastic is overbought, so the chance of a correction is becoming high.
Strategy Details: Sell short on the next reversal day/candle down (which could happen at any time). Keep in mind this trade is fairly aggressive because it’s counter-trend, so caution advised.
Target: While there is still a higher target to 2479 based on the height of triangle 1-2 projected up, I'm not too sure it will be reached exactly. To the downside, support is line 2 at 2409. Take at least half profits near there. Further support is line 1 at 2400 for remaining profits on shorts.
Stop-loss: For a new short trade it will be a close above the high of the reversal day down/current rally. From 2433 lower the stop to a breaking of its prior two-day high; then prior one-day high from 2423.
Wishing you profitable trading until next time.
Colin Abrams
