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US 500 - Potential Shorting Opportunity

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I have a confession to make. I am day trading the US 100 both on the long and short side depending on the days price action. I am using the 1min, 30 mins, 1 hour and daily timeframes to assist me in my decision making. I accept it is not conventional but the experts will suggest using a specific timeframe and sticking to it and there is sound logic in that especially for inexperienced traders or those who are beginning their trading journey.

I still believe at the moment (this could change) the long term trend has a downward bias but the volatility is providing a nice opportunity to day trade and I am trying to take advantage of this.

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The S&P 500 and Nasdaq 100 are are a very important juncture. They could easily go upwards albeit a short move or drop down. I am watching the price action with anticipation as my assumption is that there is a large move downwards looming and I would like to participate in such a move with a 'short' position. 

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At the moment US indices in general such as the Dow, S&P and Nasdaq are all rallying hard. The price action and chart clearly shows this. As I have said many times never trade against the trend so at the moment a short play is just far too risky and I would not advise it. 

I will be shorting the US indices but only when the price action dictates and a sharp drop/correction will be coming as profit takers exit positions, stop losses get triggered and fresh short positions enter. It will be quick and sharp but I am anticipating that it will arrive. At the moment just enjoy any long positions on the US indices but take profits more quickly as the reversal could come when you least expect and it could come soon. 

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The US Federal Reserve has announced it is not going to raise interest rates. This has launched 'rocket fuel' for US indices at the moment. 

6:55 pm - five minutes before 7:00 pm the fire was lit! We are witnessing the explosion. But after all fires there will be a period of smoke, firefighting and then the fire will be tamed...Enjoy the 'long' ride for now and the price action is allowing quick profits to be made and with leverage one is able to take advantage at such short term trading opportunities. 

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On ‎21‎/‎01‎/‎2019 at 07:42, elle said:

maybe this  

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done  :-)

Capture now.PNG

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One of the key things to do is identify whether the trend weakens. If one does notice then one must follow the price action to determine an entry point for any potential 'short' trade.

At the moment for me if the US 100 goes above the 7072 level then this could be a more serious rally than I thought rather than just a relief rally but we shall see. I have no idea which way this will go but the Fed announcement along with if there are positive US-China trade talks with positive earnings we could continue with this rally for longer than one envisages. 

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It is expected that the US Jobs figures will be a lot less than last month. 

Also the US indices have taken a slight turn (short term) to the downside. The question is will this be 'amplified'?

There may be profit taking on Friday as end of the week. This could in result trigger stop losses. As a result of the downward pressure it could encourage new shorts to open. Now this may not happen and the US indices may continue to power upwards but the recent US Fed decision to not increase rates demonstrates to me their concern for the US economy. 

I am keeping a close eye on Bonds, Gold, Silver, Copper and Lumber as they usually are a good indicator pre any major stock market tumble. 

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To me the trend upwards in US indices seems to be weakening.

This is normally a sign to look out for before either there is a trend reversal to the downside or a resumption of the trade upwards and it is merely pausing for a breath!

At this juncture I do not know the answer. Trading in Asia will be quiet due to Chinese New Year. 

I must admin I am waiting for the shorting opportunity in US indices but the market at times does not always deliver what is expected. The smart trade after the big drop was 'long' but at the time of the drop the media were reporting 'recession' and global meltdown, etc. Now these things may still happen going forwards but it is about timing. 

Also one must learn to ignore the media and it's 'market noise' and focus on what the price action is telling us. I accept it is sometimes harder than one thinks as the media both on TV, news channels, newspapers and online is a powerful force which can influence behaviour. 

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Just as I think the trend is weakening the trend resumes its upward projection. As I have said that upward trends can last a lot longer than one thinks.

 

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14 hours ago, elle said:

Capture es.PNG

5 waves up since christmas

Should at least be a correction?

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If you've seen my thoughts about highs & lows made outside market hours, this could make you think.

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Edited by elle

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saw  this, make of it what you will .....................

Capture es.PNG

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US-China talks delay could provide bearish for US indices. That is certainly how they have reacted to the news today but once the dust settles and the news is digested and it is more clear what this exactly means then the US indices will react accordingly in terms of price behaviour. 

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Markets are generally seeing a wave of 'red' and it is around 5:00 am. Whether this is the push for a trend reversal who knows but I sense volatility as based on recent price action any positive news could see US indices rally again. 

The Nasdaq 100 for example is trading below its 200 DMA but I would like to see it breach its 100, 50 and 20 DMA then we really are talking about a serious trend reversal. This would mean the price would have to go below the $6552 level. It is trading at the $6855 level. So we are looking at another 300 points of downward price action. Bonds are all mostly blue at the moment but I would want to see upward movement in precious metals alongside any downside in US indices. 

We are at a critical juncture where the price action will determine if the recent rally in US indices can be sustained and continued or whether it was just a monstrous relief rally.

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I sense the trend is weakening though still rather bullish to the upside when looking at the 'daily' charts for the major US indices. @Kodiak has highlighted a break below the trend channels which may lead to a possible trend reversal to the downside. 

My gut instinct tells me that there has to be a major move downwards but I cannot open the short position until the price behaviour supports this. Even then markets can still move against you like my earlier trade on the S&P 500 where I clearly shorted in a downtrend and it met several strong indicators but the trade still went against me as my timing was out. I would like to get in early on any shorting opportunity for the US indices so my eyes are firmly fixed on the price action, trend strength, volume and moving averages. 

Let us see what the coming trading week brings. 

 

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On ‎05‎/‎02‎/‎2019 at 14:02, elle said:

saw  this, make of it what you will .....................

Capture es.PNG

currently , similar (ish) 

Capture es.PNG

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@elle,

Very interesting. Though there may be different geo political factors in play. 

Also patterns in past performance does not necessarily mean that future performance will follow that same pattern. 

Having said that the similarities are very similar. It would be interesting to know what geo political factors were in play during that initial period and then conduct a 'compare and contrast' exercise. 

Nice one. It is very interesting indeed. If it played out like that then my shorting opportunity that I am looking for may not materialise for a while yet. Patience will be key.

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There I was thinking the trend is weakening!

Trends can last a lot longer than one thinks. The question is whether the US-China trade deal being done is priced into the markets. If it is then we could see a drop in prices once the deal is announced as the current price action could be anticipating the deal being done.

It is clear that news being released by the US media (driven by the US Government) is dictating the price action of US indices right now and it is very wise to never go against the trend so opening a short right now is an absolute no. 

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onwards & upwards  use the lines to guide:)

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Capture s2.PNG

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Paths can change. I am not suggesting they will but destinations can change due to bumpy roads or traffic. At the moment it does seem onwards and upwards. 

As the longer term trend was down I did not go long on the US indices as I did not want to go against the longer term trend in play.

It looks like the major US indices are on course to test their 52 week high.

It would be a brave trader to trade against this strength. Contrarian trades are extremely difficult but if timed right can be hugely profitable in a shorter time period than the upward trend that took place previously. 

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@TrendFollower  "The destiny of every Trend Line is to be broken"  - so, yes trends can change, but until then..........

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On ‎21‎/‎01‎/‎2019 at 07:58, Stewart said:

@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. 

:-) getting there

Capture dj.PNG

Edited by elle

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If there is to be a positive announcement in relation to the US-China trade talks then until any confirmed announcement to this degree is released by the media the US indices could just continue to go up.

'Anticipation - Price Action'

The trade here could be 'Buy the rumour - Sell the news' strategy. 

Right now the trade is 'long' on US indices and certainly not short. 

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