S&P was seen yesterday trying hard to move higher but the entire upward move seemed too weak. Prices were rising in an overlapping pattern and topped right on the downward sloping red trend line that comes from the two previous highs at 1687 and 1674. Our bearish stop levels were not breached. On the contrary, before the market close, prices started to pull back down once again. Another sell trigger signal was given when 1657 was broken downwards. Important support level is the 1640-35 area and we believe that is going to be tested again as short-term trend is down.
In these charts you can see the sequence of lower highs being formed. This is a bearish signal that could be the early sign of a new downward leg that we ‘ve been expecting the last few days towards 1620-1600. First however, want prices to break below 1640-35 support in order for stops to be triggered that in turn will push prices towards our targets.
If the sequence of lower highs completes with lower lows (breaking below 1635) then it will be almost certain that S&P will test 1620-1600 level. For more analysis on this index and if you want to see my trades, become a subscriber today. Our past performance trading fx,commodities, indices and stocks, can be found in excel and pdf format in our Premium Services page.
Thank you for taking the time to catch up on my thinking.
A term used to describe a trader (bear) who is expects that a particular asset – be it a commodity, currency or product – to fall in value. The opposite of a ‘bull’.
The idea is that bears attack by getting up on their hind legs and striking their opponents down with their paws, symbolising the fact that they are sellers driving prices down.
Beliefs held by the aforementioned ‘bears’ of the trading world, are described as bearish. Characterised by a generally pessimistic outlook on the state of a given asset, a bearish outlook would suggest that a fall in value is imminent. Opposite of bullish.