SPX might make a big pullback to 4010 and 3960 in a deep correction even if it is going higher. Strong trending upwards conditions now would still be worth following but there’s a fair case to be made for a retracement now. Only in a very strong move (Which we may be in) would we not retrace at least a bit here.
During the day the bulls have now broken the 50% fib of the recent swing.
Moves rarely reverse off the 50 fib and hitting this level often implies the market is going to head higher.
Two of the typical corrections we can get here are right back into the previous fibs. Sometimes the shallow one and sometimes a deep one.
I favour the shallow one, but both are trades I am willing to take if the first stops hit.
Breaking and holding under the second level would probably indicate this buy trade is failing and be a full stop out. Some slight spike out tolerance needed.
In a strong move the market can trend through the fibs. If higher lows are holding, it’s easiest to bet on momentum.
But bulls may be due to get a mini rug-pull if we’re heading back to retest the previous fibs. These moves often come as flash crash events and set up good buys afterwards, but they are very uncomfortable situations if you’ve been long from high in the move.
The case for the SPX short here is so-so. Probabilities of a pullback from the fib is reasonably high. Placing tight stops is liable to be wicked out if too early and obviously being on the wrong side of the developing bull trend would not be a good idea but the case for the near-term bear to under 4020 is probably better under 3950.
Looks like uptrends might continue.
Long RUT 1876
Stop 1870
Long SPX 4058
Stop 4050