Jump to content

US Indices Short - the big one!

Recommended Posts

For some reason this didn't post over the weekend so here goes FWIW.

 

Will this rally never end?  It certainly seem like it wont and now commentators are calling for fresh all time highs and another few years or the Bull.  Bull something I say...  People are saying the trade is Long not Short, I couldn't be that certain either way myself...  We are getting gaps all over these markets at present and while the rally has been strong it is still following a normal pattern for a retrace.  Momentum is waning as a strong NMD emerges, again consistent with a retrace rather than a motive wave.  Previously I wrote on a FTSE100 Divergence leading me to believe that market would rally hard, which it did.  Now it is the turn of the Nasdaq, which is lagging behind the Dow and SP500.  Could it be that the Tech company bosses are not aligned to the other industries in terms of share buy back price engineering?  This is likely as they have never had to manipulate their shares to get over inflated pricing...  IF the only buyers are the corporates themselves, as some suggest, how long can that go on?

In technical terms all the major indices are at or near significant resistance points for me.  The Nasdaq has just blown past the Fb 62% and is now knocking on the door or the previous high, which was a long term channel line retest after the pre-Christmas significant break.  The rally is in a narrowing channel with strong NMD building.  This market is lagging SP500 and Dow and has not yet made higher highs, as with the other 2.

The Dow is also knocking on the door of the same previous high as the Nasdaq, on that at least there is correlation.  The same technical conditions as the Nasdaq exist for the Dow.  If we see a turn this week then the next question is whether that is the full retrace or just a Wave A of a much longer retrace that will run out to the early Summer at least?  Don't know of course, the Markets will reveal all in due course but I am leaning towards the latter.  Still I would be seeking to go Short on signals with tight stops as a placeholder and then read price action as any Bearish move develops.

NASDAQ-Daily_170219.thumb.png.8b3bc534d2927edba45a5210a17a5bea.pngDJI-Daily_170219.thumb.png.0aef2f25a61f906c2882565ce7ecdaef.png

  • Like 1

Share this post


Link to post

Dow looks like it could have made a rally top in or around the Fib78% and resistance zone with the previous turning point.  The narrowing channel supporting line has not yet been broken though so not conclusive yet.  However NMD is strong on both Daily and Hourly charts, resistance zone is strong and the EWT count fits either a wave A or a full retrace to wave 2 (time will tell which it is).  I will be looking for a breakout of the narrowing channel in the coming days if not tonight.

 

On the Nasdaq things are looking more Bearish.  Similar set up to the Dow and SP500 in terms of technicals but in this case the Narrowing channel has been broken through.

DJI-Daily_210219.thumb.png.5bc013a2768382aed4893812d8a28135.pngDJI-1-hour_210219.thumb.png.51946bac137590602157d844f1e69ba7.pngNASDAQ-Daily_210219.thumb.png.0f008923ab93b0898afade2ddfd57a00.pngNASDAQ-1-hour_210219.thumb.png.9e2447780c0185428eba7968acf8bac2.png

Share this post


Link to post

Nasdaq took a second retest of the lower channel line and key retrace resistance of Fib 82% across all US majors.  The move so far is a near perfect A-B-C form with a strong drop away from resistance.  A new lower low will be significant but the final hours of Friday, if Bearish, will set up further falls next week.  Wouldn't want to be Long over the weekend.

I am short off the retest turn, Dow and Nasdaq.

NASDAQ-1-hour_220219.thumb.png.b07c04b4355e013e1b26c499f4a06bf0.png

Share this post


Link to post

Interesting week of price action.  SP500 and Nasdaq make higher highs to match the previous level of the Dow (Fib 88% zone) but the Dow itself makes a lower high.  FTSE100 & Dax make higher highs too but Nikkei and Russell 2000 have tracked similarly to the Dow.  All of the indices turned in key resistance zones as follows:

  1. Dow, SP500, Nasdaq - Fib 88%
  2. Russell 2000 at a resistance zone between Fibs
  3. FTSE 100 - Fib 62%
  4. Dax and Nikkei - Fib 50%

Obviously the US markets have been more optimistic/bullish/over-exuberant (delete as desired) than the others, and therefore offer the most volatility and therefore opportunity.

My long term outlook remains intact despite this US over exuberance and all 3 scenarios remain in play as follows (see Dow Daily chart below):

  1. Complex retrace as Bull/Bear slug-fest continues until the Bulls throw in the towel in early Summer
  2. Towel already thrown in but will still see a significant retrace before the critical support break into the Big Big Short
  3. A final leg up to a new all time high

I cannot tell whether 1 or 2 will emerge at present so will watch price action over the coming months with interest but the nature of the rally just ended suggests scenario 1 as the lead option, just.  For scenario 3 I would expect to see more of a sideways move than a sharp Bearish phase.

The technical picture (using the Dow but very similar in all major indices) is as follows:

  • Negative Momentum Divergence on the Daily at the Wave A(pink) or 2(Purple) highs
  • Clear area of significant resistance at the rally end (Fib 88%)
  • Significant pin bar price action at both rally end and EWT A-B end
  • Very strong bearish move away from the turn zones.
  • EWT A-B or 1-2 with a lower low (not yet on SP500 and Nasdaq) and smaller EWT1-2 with another lower low (see 4 hour chart also)
  • Oscillators turned back out of over bought, journey down to over sold indicated.
  • Russell 2000 made a lower low (others should follow into a short term A-B-C at least but likely to be a longer Bearish move).
  • In addition the Weekly Nasdaq chart shows a narrowing channel to the all time high (Oct 2018) and a break and retest of the lower channel line, the latter yesterday with a sharp bearish pin bar rebound off the failed retest.

Trading strategy:

  1. I am already Short off the first and second turns on the Dow and off the recent top out and turn on SP500 and Nasdaq - I am only trading US large caps as this offers the larger potential under either scenario 1 or 2 above.
  2. I am stop protected at break even on those early trades
  3. I will seek to sell into rallies of any reasonable retrace significance
  4. I will look for those retraces around channel breakout points (SP500 & Nasdaq) and off support zones.

 

DJI-Daily_230319.thumb.png.4ed2bb7f154568a775300e84acedc91b.pngDJI-4-hours_230319.thumb.png.f3876b415aa8915b29bda7354885653a.pngSPTRD-Daily_230319.thumb.png.a347f3129814a66b7a443e025364d02f.pngNASDAQ-Weekly_230319.thumb.png.16ff387d8bd5ce14c85cc5f2cb0e7488.pngNASDAQ-Daily_230319.thumb.png.496e06a78b66084b646f470fa798b803.pngRUSSELL-Daily_230319.thumb.png.ab4b0c95417067ae85603730f56c4852.pngFTSE100-Weekly_230319.thumb.png.041a86830230d7da8fd64c9802570afc.pngDAX-Weekly_230319.thumb.png.9b68050be0c5ae07176532e777ba4eb1.pngNIKKEI-Daily_230319.thumb.png.53227fbd2de3b469166b336e535e8f78.png

Share this post


Link to post

Frustrating business this trading at times.  A strong Bearish move was almost totally reversed last week but not quite reversed.  Will it be?  The Bulls certainly think so but then that is all to the good for me, I always worry when the pack (and the MSM) align to my way of thinking too early.  For now, at least until past highs are broken, I am minded to expect a lower high reversal into a strong Bearish move, after a short continuation of last weeks bull into next week.

DJI-Daily_300319.thumb.png.227d73047669aa7c49136daeead91890.png

Share this post


Link to post
Posted (edited)

DOW daily

Gap closing time?

 

DOW Apr.png

DOW Apr 2.png

Edited by Kodiak

Share this post


Link to post

Certainly on the cards @Kodiak but the Nasdaq is exceptional bullish, to be expected in a tech led bull market I guess.  Price has stalled at key resistance levels (last chance saloon for Bears maybe (see my "are we there yet" thread).  However the jury remains out at present as US stocks teeter on the brink of either fresh all time highs or a significant bearish move.  One thing is for sure, the Bulls are not going "quietly into that good night".  

Share this post


Link to post

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Member Statistics

    • Total Topics
      7,875
    • Total Posts
      41,737
    • Total Members
      51,986
    Newest Member
    Mead
    Joined 13/12/19 21:54
  • Posts

    • Hi all, been up and running and watching from the side lines. Thanks for putting the list up early as I made my own list from the gap scanner from ideas but you seemed to have more plus alot of the tickers I could not trade on IG but jumped on TG Therapeutics at 973 and took some money from that. Then jumped back in at 1059 and she plummeted and my heart just sank. I managed to ride it back up to 1053 and got out with a small profit of £20. Should have put my stop in but am still learning to get out quick . I was so lucky it went back up. Thought I was going to be on a bad loss because I didn't get out early enough. I find that if you only gain a small amount each day its better that going hard at it and loosing.  Still got loads to learn. Anyway cant wait till monday.  Great content and look forward to next week. Have a great weekend.
    • Is it safe to come out now?
×
×