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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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Thanks for sharing Trend, very interesting to follow

 

Regards

 

Ian

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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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@Stewart,

Yes I think you summarise it well. I think the notion of the trade was correct and my timing was initially good as I was 140 points up at one stage but I then opened a second position at the wrong time and then the trade went totally against me.

Interesting about going short. I think I shall be trying again very soon. 

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@elleYour level is equivalent to Dow at 25,500 . In an ideal scenario a great level to get short but I don't think we will get anywhere near that level over the next four weeks. 

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The price action is hinting / suggesting at another move downwards which is long due and one expects profit taking and stop losses to be triggered as a result. Let’s see what happens!

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 The ramp up we saw into the end of last week seems to be reversing here. We should test 24,000 Dow and S&P 2,587 as first tests but I would look for much deeper tests over the next few weeks. I am still thinking retracement test of the gap down to 26th December levels. 

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@Stewart,

It sure does.

I would expect the S&P 500 to test the level seen around 26th December 2018 (double bottom) at the very least. If things start turning ugly around the major countries in the world such as US, China, UK (Brexit) then we could see a move further downwards but this is just assumption based from me. The price action will test my assumptions and tell me if I am right or wrong.

The risk on shorting the Dow and S&P is that any positive news will be pounced upon by the buyers creating large rallies which will increase the size and sharpness of the volatility and make trading conditions extremely difficult.

I am tempted to day trade any move downwards in the S&P 500 thus taking smaller profits daily and avoiding the overnight charges. It is just a thought but one I am seriously considering. 

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The Nasdaq 100 (US Tech 100) also offers an attractive risk/reward trade in terms of margin you have put up against daily points on offer. This matters as the more leverage you use the higher the margin requirements. 

I am getting more and more keen on day trading in the direction of the short term daily trend.

 

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That's a fair point. Have you done any work on margin requirements versus percentage market moves for Major Indices? It would be right to look at some of the Boost 3*Index shorts , Puts on Indices and Outright Shorts . I use all three but when I have some time I was going to look into what was most cost effective regarding margin requirements to ensure biggest potential gain for the margin balance.

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20 hours ago, Stewart said:

 The ramp up we saw into the end of last week seems to be reversing here. We should test 24,000 Dow and S&P 2,587 as first tests but I would look for much deeper tests over the next few weeks. I am still thinking retracement test of the gap down to 26th December levels. 

I believe I have suggested this as well, it's just a question of when & how it gets there

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Tomorrow there will be voting in the US Senate in relation to the Government shutdown. This news will create price action one way or another for US indices. 

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At the moment the rally is pretty spectacular. I see a very crucial point coming which the chart below will highlight. I have added a trend line which will show that we are at a stage where if the price keeps on rising then shorting right now is simply not an option unless a monster downward movement follows.

271775489_USTech100_20190125_17_37.thumb.png.e9fddbcb422cd0a180540b6d2e75480a.png

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Does anybody on the IG Community think that the S&P 500, Nasdaq 100 or the Dow will be making new 52 week highs in 2019?

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It is 5:00 am in the UK and the markets seem jittery. Brexit is being mentioned on all major news channels available on Sky both in the UK and abroad. 

We could see a day of red today unless there is some positive news released by the media which gives traders and investors a reason to go long. 

I am expecting all the major indices to be in the red today as I can imagine a lot of short positions being opened by day traders the day before the Brexit vote due to uncertainty. 

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It's after 10:00 pm and US indices are down and in the red just as expected. 

Markets will be jittery with Brexit as the UK is the world's fifth largest economy and has deep historical ties with major economies around the world including the US.

If growth projections for the UK suffer as a result then it will have an impact on its major trading partners including the EU and US. 

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The Nasdaq 100 is around 100 points down from yesterday. 

Trump has another round of talks with the Chinese this week. 

Earnings season is amongst us. 

Brexit vote.

I think it will be interesting to see how UK markets close and how US markets open today.

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If things were to turn sour on US indices then I see a potential 600 points on the 'short' trade. Now add leverage to this trade and you can see how attractive per point the US 100 short could be. 

Timing will be key. I got timing wrong on the previous occasion but I am opening and closing my positions more or less daily and taking the profits on down days. I am not trading on the long side and just remaining on the sidelines on those days as the longer term trend is still down on major US indices. 

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    • Thank you JamesIG for your explanation of how IG determine their price charts. "This means there will always be a discrepancy with the highly publicized index price" ... Yes that is also noted but your company "interpretation" has the low 9 days before the other outlets. However you want to spin (explain) it. That makes it incredibly difficult to ascertain what a real low is.....is it the one you show or the one the others show? It also, at least to me, appears that best practise would be served if the resulting price chart reflects the index it purports to follow/promote. EWT users ( I follow a US analyst) will know the frustration. His DOW chart shows a different low....and therefore a different count. Tongue in cheek.....so when was the recent low in the past two weeks?
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