SPX Swing Analysis
30th September 2023.
Time Frame Used: Weekly /Monthly
Overview
Markets have been getting a bit more volatile of late and I think it’s likely we see that trend continue which ever way price goes. An objective analysis can still make a case for both bull and bear but upon the failure of the last low to produce a new high I flipped my bias and positioning to bearish.
The case for a bear market starting is now better than it’s ever been. In this post I’ll go into detail about how a confluence of signals built up over years present an entirely unique bear signal here (Not present in any of the failed bear scares). It’s technically perfect - but there’s practical risks.
It’s been good being a bear of late but it’s best not to be complacent. If bears are wrong at these levels all of the implied bull moves would be parabolic.
Multiple things give weight to a bear bis being preferable to a bull one at this point.
As well as the simple structural break I found the style in which intra-day action trended down through these levels was not what I’d be expecting in a bull move. All the simple retracements held and it made no sense to be a bull when I could hit optimal setups for bear trades and move stops into even and see if I got paid.
This remains my point of view for the moment. The market is in a near term downtrend. I can’t know if this is a correction in a bull move or if it’s a failed new high of a bull trap break. Price might be going down 100 points or 1,000 points. Ideally I want to short consistently, trail stops and plan how to spot that going wrong.
Development of a bear move has to be taken seriously. Currently charts have all the conditions in place to give realistic odds of capitulation if we continue down (Short term) and when breaks are made in this type of move in a real bear reversal we’d expect to see multiple days of selling with little retracement.
I’ve never seen a more compelling confluence of short signal in SPX. Many things matching up over many time frames. It’s a no brainer to short. Also, it is imperative to keep in mind what could be on the other side of being wrong. When textbook signals fail, it’s usually an exceptional move to the other side.
Primary bias and positioning is heavily short. This is contingent upon the formation of lower lows and lower highs (Since I am betting we’re in a trend leg). I’m also planning big support levels on the way down where we have a good chance of a bounce in a downtrend and if we bounce I can hold longs in case uptrend develops.
If 4150 is hit I think we’re going to either see a major low there or the breaking of this becoming the point where the failure of the uptrend becomes much more obvious.
In this analysis we’ll weigh the bullish/bearish cases. Provide primary and secondary trade plans. Major support and resistance levels and real trading signals. We’ll also look at the worst types of moves for the strategies we are using and the conditions where we’d want to sit out and wait for things to get better for our strategies.
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