S&P is our focus today as it has given us some worrying signals of an impeding downward move. S&P got 2 points away from our 1512 target and pulled back towards 1500. An hourly close below 1500 or steep decline below 1496 confirms our view that at least a downward corrective move has started. We expect S&P to continue the decline towards the first support at 1492 cash. As shown below in the 10 minute chart we expect prices to at least test this level.
If the sequence that started from 1509 of and lower highs continues, then we could lower stop levels for short positions as well. The second worrying signal we got comes from the 60 minute chart shown below.
The hourly candle has closed below the middle pitchfork support. A close below the lower will push prices lower towards our first target of 1490. This correction if confirmed is expected to test the 38% retracement (1467) as shown in the hourly chart.
Bottom line, the top could be in if prices don’t move back up above 1508(the intermediate high). This could be used as a stop for short positions. Investors with less risk appetite could just close their long positions and wait to re-enter after the correction has ended. We mentioned many times before that traders should be ready at all times to pull the trigger. If you entered late don’t hesitate….follow the trend. If we are wrong at calling this top we would maximum lose 10 points. For playing the short card with less risk, traders could wait for a back test of the broken pitchfork support(1503-05) to sell.
As always, thank you for taking the time to catch up on my thinking.
Technical analysis indicator which comprises a central moving average line with two channel lines above and below. Named after Chester W. Keltner, the central line is a simple 10-day moving average of typical price (taking into account the average of high, low and close price for that day).
Most often used in conjunction with volatile markets, the Keltner Channel identifies an overbuy when prices rise above its top band. While an oversell is indicated by a price fall to beneath the lower band.