SPX day trading levels

We’re at a weird spot for day trading so let’s first frame things inside of the slightly larger context.

In classic corrections to a bear trend we should consider bullish spikes to be a big risk to shorts up to the highlighted area.

This is a big risk for short term bear trades. Bear traps are always liable to form before the real reversal and the last spike outs are often really strong and brutal moves. Bears ideally want to get stopped out early in these moves. With that being said, the current intraday price action is strongly bearish.

If we’re entering into the start of a bearish reversal the selling should remain pretty consistent. While it’s doing this the obvious thing to do is short but it’s important to understand the bet in being short here is essentially lower highs will continue to form. So if lower highs break - that’s where shorts should exit.

Most of the risk scenarios to shorts would likely feature parabolic moves.

If we’re into a structured downtrend it should be fairly simple. Downtrends tend to look a lot like this.

And we have action very much like this now.

While we have this structure the market is a very obvious short into rallies. If we get above the high point marked “C” we’ve seen the first failure of bearish patterns and this is a time to shelve bear plans and potentially switch to bullish plans with stops under the last big low.

Levels for trades/biases

Under the 161 - 220 fib of this range I think a strong bear break has been made. If 4220 is broken the bias is to short all new lows and pullbacks putting stops above the local swing highs. Aggressively shorting and trailing stops to lock in profits and remaining in while it downtrends.

If we’re in Elliot wave patterns the next bull move should spike out the range. It can go as high as the 76 fib while remaining in trend. Giving us an optimal shorting zone 4242 - 4250.

If we break above the last high the simple bear patterns have failed and it’s best to wait a while to make new decisions. Probably will revert to buying dips of this breaks but would usually be best to wait a while before doing anything.

During time of writing this we’ve gotten significantly close to 4220. We’re at the area I think there’s max chance of a bounce to set up a better entry for a sell and also at the spot where if we keep dropping I’ll start to short into breakouts and trail stops tight. Ideally we want a bounce to 4250 or so here for a good short level.