Is it time to short SPX?
Bearish Idea: The market is likely to make a decision very soon with regards to making new all time highs or to resist that upper trend line in the broadening/expanding triangle (daily time frame). My opinion is that SPX will resist around the 3010s area. There are many Fibonacci ratios and trend lines in several time frames converging in that area. Also, the daily RSI (14, close) reached 71, an overbought condition. Bond yields continue to make new 52w lows. The 10 year bond yield is already pricing in about two rate cuts of 25 basis points each. The recent SPX move from about 2730 to about 3000 in June/July is about 10% in a span of one month. This is unsustainable. Could SPX make substantial new highs? Possibly, but I have doubts. I have a feeling that an extremely large correction is coming soon. A drop to the bottom purple trend line of the broadening/expanding triangle (daily time frame) in the 2200s area within a short span of time (3 months or less) wouldn't surprise me.
Bullish Idea: On the other hand, according to Thomas N. Bulkowski's research, broadening tops for upward breakouts perform well when the trend leading to the pattern takes 3-6 months. Also, the pattern with a partial decline (SPX decline in May, then rally in June/July) improves the probability of an upward break out (74% of the time). Breakout direction is up 61% of the time. If this is true, the measured target for SPX is expected to reach 3440 with a 77% probability, again, according to his research. Personally, this target seems completely out of this world, but look where we are today. We're at 3000 and many people a few years ago didn't think it was possible. This target is also in line with another reputable trader, MarkRivest, whose claim of low 3300s should be considered if his 3047 target is met in a blowout fashion. His target of 3047 was mentioned in his posts several times over the past several months and it seems like it's coming to fruition.
Summary: So there you have it. You have my opinion, which is bearish, but Bulkowski's many years of pattern research and MarkRivest's many months of analysis shows that SPX has a better probability of going higher. Remember, it's only a probability. There are no guarantees how SPX will move. It all depends on the catalysts that will take us where the market deems appropriate. As always, economic data, monetary policies, and geopolitical affairs should be monitored to get an idea of where the market may be headed and before taking any kind of directional bias with your investments/trades.
Bullish Idea: On the other hand, according to Thomas N. Bulkowski's research, broadening tops for upward breakouts perform well when the trend leading to the pattern takes 3-6 months. Also, the pattern with a partial decline (SPX decline in May, then rally in June/July) improves the probability of an upward break out (74% of the time). Breakout direction is up 61% of the time. If this is true, the measured target for SPX is expected to reach 3440 with a 77% probability, again, according to his research. Personally, this target seems completely out of this world, but look where we are today. We're at 3000 and many people a few years ago didn't think it was possible. This target is also in line with another reputable trader, MarkRivest, whose claim of low 3300s should be considered if his 3047 target is met in a blowout fashion. His target of 3047 was mentioned in his posts several times over the past several months and it seems like it's coming to fruition.
Summary: So there you have it. You have my opinion, which is bearish, but Bulkowski's many years of pattern research and MarkRivest's many months of analysis shows that SPX has a better probability of going higher. Remember, it's only a probability. There are no guarantees how SPX will move. It all depends on the catalysts that will take us where the market deems appropriate. As always, economic data, monetary policies, and geopolitical affairs should be monitored to get an idea of where the market may be headed and before taking any kind of directional bias with your investments/trades.
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