SPX-Sell the rip!!!
Updated
Last weekend I posted about wickless gaps and how those are continuation patterns.
I also made a statement that I did not think we would see SPX at 4K for a while.
The above chart shows my thinking process since many traders on TV are calling for a possible retrace to 4020 levels.
IMO the June 6th weekly candle made a very bold statement...it bearishly crossed the wickless bull gap that was created March/April of 2021 and then proceeded to make it own bearish wickless gap.
***In early May we tested the 4K area and closed below it on the weekly however the following week (May 23rd) we bullishly crossed right though that wickless gap. THIS WAS THE BULL CASE-we needed to HOLD this level for bullish confirmation but the bullish case has failed.***
On May 19, 2022: “What we need to see is inflation coming down in a clear and convincing way, and we're going to keep pushing until we see that,” Powell said Tuesday during a Wall Street Journal live event. “If that involves moving past broadly understood levels of 'neutral,' we won't hesitate at all to do that.”
Wed, June 15, 2022: Powell announced a 75 bps rates hike vs. a 50 bps rate hike that was anticipated in May.
Moral of the story-Don't Fight the Fed.
(Of note on this chart are uncleared gaps on the weekly SPX-there are a couple even lower than 2200)
I also made a statement that I did not think we would see SPX at 4K for a while.
The above chart shows my thinking process since many traders on TV are calling for a possible retrace to 4020 levels.
IMO the June 6th weekly candle made a very bold statement...it bearishly crossed the wickless bull gap that was created March/April of 2021 and then proceeded to make it own bearish wickless gap.
***In early May we tested the 4K area and closed below it on the weekly however the following week (May 23rd) we bullishly crossed right though that wickless gap. THIS WAS THE BULL CASE-we needed to HOLD this level for bullish confirmation but the bullish case has failed.***
On May 19, 2022: “What we need to see is inflation coming down in a clear and convincing way, and we're going to keep pushing until we see that,” Powell said Tuesday during a Wall Street Journal live event. “If that involves moving past broadly understood levels of 'neutral,' we won't hesitate at all to do that.”
Wed, June 15, 2022: Powell announced a 75 bps rates hike vs. a 50 bps rate hike that was anticipated in May.
Moral of the story-Don't Fight the Fed.
(Of note on this chart are uncleared gaps on the weekly SPX-there are a couple even lower than 2200)
Comment
I believe the April sell-off began 3/5 down. This sell off started at the beginning of Q1 Earnings Season. Q2 Earnings season is just about to get underway. Typically, a really weak or a really strong market will only be able to retrace to the .382 level. I've circled the .382 RT level on this chart. Next week there appears to be a confluence of resistance around the 3940-3980 level. IMO if we hit above 4020 then we will get to the 4200 level. Where we sit right now the charts are telling me the short side outweighs the long with good risk management (i.e. sell when we hit strong resistance areas with a SL at 4050)
Comment
Thus far we got to 4012 and then reversed pretty hard and couldn't clear the gap completely. Today we closed at support with a ton of earnings & macro about to take place. IMO if we go back up to retest 4012 then I think we will continue up to 4150 at a minimum therefore my SL on 4K sell is now breakeven.
Comment
Welp...was right on target with my thoughts that if we retested 4K after July 26th we'd continue up to at least 4150. My guess right now is that we are headed to 4230-4260.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.