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US 500 - Potential Shorting Opportunity

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Fed spike retrace. that supply got absorbed, then that fed chairmen thing last Friday did the rest

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@elle,

Interesting. So in your personal opinion how do you think Gold and Silver's price will behave?

It would be both useful and interesting to know your views. 

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Thank you for the question. 

 

  Just to let people know, I am not in this community to get or be "personal", hence I will not comment on my actual trades ( if people don't like it, fair enough) . I simply aim to post ideas or answer questions (if I can) & most importantly learn from others/ get information about IG.

As far as Gold is concerned, I believe I have posted a chart showing where I think potential support & resistance areas may be (Silver I have never looked at).

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The S&P 500 hit 2595 today so it is getting close to the magic round number of 2600. It is possible that the price touches 2603 - 2605 before a small dip but this will be dependant on the news flow coming out of the US. 

Any negative news flow out of the US could see heavy selling taking the S&P to potentially the 2350 to 2450 levels.

This trade is far more difficult now than when I entered. In a way I have reduced my risk on this trade by taking a loss on the second trade (cutting losses early) and thus increasing my 'Equity' and 'Available' capital to trade for any other opportunities. 

 

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Based on any significant details being released from the US - China trade talks it seems the small dip has come well before my level of 2603-2605. It is being reported that the market expected more substance from the talks which neither country has announced. 

I think 2600 level is a critical point in S&P's journey and going forwards if it can stay above it then it indicates bullishness to me but if it stays below then it could represent worrying times ahead.

The trend is not as clear as I would have liked and if you look at when I entered the trade it was like a straight line dropping and it continued to drop (at one stage 140 points in profit) and then it has began rallying quite hard.

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2604.18 for me is now the critical point which the S&P will need to hit and move beyond. If it does then my short is in danger and that should be me out of the trade unless I intervene manually and either exit before or amend my stop loss which I am unlikely to do as I like to accept I am wrong and move on. I would have to have a very good reason to amend my stop loss and I do not have one at this point so unless the short term trend changes back to downwards before $2605.00 is hit then I am likely to be out of this trade. 

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The US 500 is just not powering through 2600 yet though it has tried and had a few attempts recently. Next week should give us a more clearer direction of the S&P 500. I think one of the reasons why it did not power through is that no real substance or clear progression was announced supported by anything. Add the US shutdown at the moment and one may begin to understand why. 

What I do not know at this moment is how Tueday's Brexit vote will impact not just the UK markers but other markets around the world. It may have not impact at all or it could have bigger impacts than we all realise. I just do not know at this moment in time as I have read reports highlighting both sides but I do not really think anyone knows for sure. We will find out next week and I think next week is going to be another volatile trading week where indices are concerned. 

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So where am I with this live trade at the moment? The current performance update is below:

Short opened on 20/12/2018 at 13:30 is down 66 points.

The trade is just hanging in there. Daily charges are being incurred so any further rally will see my stop loss triggered and I shall be out of the trade. If the price continues to move downwards like it seems to be then the trade will remain open though I may manually intervene should the trend not be strong enough or begin to lose momentum.

My experience tells me that the recent bottom should/could be revisited and tested but IG's daily charges make it difficult to hold such a position and also there is no guarantee (high probability) of that at this stage. I am keeping close eyes on this trade and I may need to manually intervene and exit should the downtrend not continue strongly. There is no justification of paying daily charges when the trend is not strong enough in the direction of my trade. When the US markers open this afternoon (UK time) it should be interesting.  

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I have exited the 'Short' position on the S&P 500 and the final result is as follows:

Short opened on 20/12/2018 at 13:30 ended up down 96 points.

Both my 'Short' trades on the S&P 500 have resulted in losing trades. That is fine. One learns and moves on. I try not to get emotionally attached to any of my losing trades and I have had many. 

The S&P 500 is trading above its 20, 50, 100 and 200 day moving averages so it is not wise to open any shorts on this yet. The 20,  50 and 100 day moving averages are all sloping upwards which indicates to me a bullish pattern but the 200 day moving average is sloping downwards which still gives me the impression that there could be a big move downwards looming. I do not know when but I would be surprised if the S&P 500 did not revisit and re-test the recent low formed.

The volume is not convincing in my opinion. When you look at the volume when I went opened my short trade compared to the volume now when it is trending upwards then there is a stark different. This does make me think whether this is just a monster relief rally and it does make me question how genuine this rally is. However, it is the price action which determines whether to trade or not and if so then which direction to trade everything else is secondary. 

I hope those who were following this live trade found it both useful and beneficial. Also for those of you not aware I was also sharing live trades in Gold and Silver which both were profitable trades so you may wish to look at that thread if you have not done so. It then gives a balanced picture of both profitable and losing trades shared with the IG Community. 

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@softcell,

No problem. 

Though I made losses on these trades it has done wonders for me in my 'Long Term Investment Portfolio' as I made some lump sum investments into my US Smaller Companies fund and Automation, Robotics and AI funds which have US based companies in the portfolio.

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  @TrendFollower . I have been watching the S&P 500, Dow and FTSE with interest playing it from the long side but I actually closed my positions on Friday and started opening small shorts that I will build on Monday and Tuesday. The sentiment was very negative going into the start of the year after that December 26th meltdown and it has taken this twenty day rally to force people out of their short FANG positions and short Indices. Bank earnings have been mostly good and we shrugged off Netflix nos. The Brexit noise and politics in Europe have led to some bounce in U.S Futures but I believe this is coming close to the short term top. From here we could easily test close to that 26th December low if not a little further. Markets are all about timing and your short was a good one but perhaps you got a tad greedy with the profit. GLA.

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