S&P 500 IndexUpdated S&P Analysis Week of 10/11/2020: Will Market Continue Melt up?
Over the last several weeks, my trade setups have been spot on and my returns on the S&P have been outstanding. Check them out in my profile.
As usual, I keep my charts super simple because I think markets are complex in and of themselves. Finding a high probability setup without all those noisy indicators (MACD, Volume, Moving Averages, and all the other ones I don't even know about) and complicated theories (like Elliot Wave) is what I do by looking at buying off support during an uptrend and selling off resistance during a downtrend. That's simple and easy to learn and it helps me find good trade setups.
This week I'm looking really only for long setups (trade 1 & trade 2). I put a short opportunity only if the strong support at the bottom is retested and fails (I'm not anticipating but I left it there for awareness). We are in a strong uptrend/melt up, so I'm not looking for a sell unless some major support breaks.
I also don't try to predicate where the market's will go. I look for trades on both sides and enter trades based on what the market gives me. I have some bias but this helps to keep them in check.
This week will probably continue to see the volatility and whiplash we have been seeing. I don't think that will be a surprise.
However, here is something I think people forget. When price tries many times to break above a strong resistance, breaks through finally and then takes off without looking back, 9 times out of 10, price comes back to the breakout area for a retest. When does price do it? That's the hardest question to answer because market makers will do it when it's least expected and may wait until price goes so far past the breakout that people forget and think we will not come back.
I'm 99% sure the broken strong resistance area will be retested. This is my trade setup #1. If price this week comes back to retest that area and resumes off it, that's a strong buy. Otherwise breaking above all time highs with a retest and resumption is another high probability setup in case you miss trade setup #1 or price keeps going up without looking back. But caution if price doesn't look back, that at some point in the future, price will most likely come back to that breakout area. So always be sure to take profits along the way.
Good luck and be careful out there. The market makers are really trying hard to screw both sides lately (even more than usual)
Remember when trading:
"When it feels really wrong, it's probably right. And when it feels really right, it's probably wrong."
As usual, I keep my charts super simple because I think markets are complex in and of themselves. Finding a high probability setup without all those noisy indicators (MACD, Volume, Moving Averages, and all the other ones I don't even know about) and complicated theories (like Elliot Wave) is what I do by looking at buying off support during an uptrend and selling off resistance during a downtrend. That's simple and easy to learn and it helps me find good trade setups.
This week I'm looking really only for long setups (trade 1 & trade 2). I put a short opportunity only if the strong support at the bottom is retested and fails (I'm not anticipating but I left it there for awareness). We are in a strong uptrend/melt up, so I'm not looking for a sell unless some major support breaks.
I also don't try to predicate where the market's will go. I look for trades on both sides and enter trades based on what the market gives me. I have some bias but this helps to keep them in check.
This week will probably continue to see the volatility and whiplash we have been seeing. I don't think that will be a surprise.
However, here is something I think people forget. When price tries many times to break above a strong resistance, breaks through finally and then takes off without looking back, 9 times out of 10, price comes back to the breakout area for a retest. When does price do it? That's the hardest question to answer because market makers will do it when it's least expected and may wait until price goes so far past the breakout that people forget and think we will not come back.
I'm 99% sure the broken strong resistance area will be retested. This is my trade setup #1. If price this week comes back to retest that area and resumes off it, that's a strong buy. Otherwise breaking above all time highs with a retest and resumption is another high probability setup in case you miss trade setup #1 or price keeps going up without looking back. But caution if price doesn't look back, that at some point in the future, price will most likely come back to that breakout area. So always be sure to take profits along the way.
Good luck and be careful out there. The market makers are really trying hard to screw both sides lately (even more than usual)
Remember when trading:
"When it feels really wrong, it's probably right. And when it feels really right, it's probably wrong."
Note
I received several questions asking if today is enough to consider a retracement (market's down 77%). It was a nice retracement but price landed within my 'No Man's Land'. The reason I call it No Man's Land is because it's too close to a major resistance area after breaking through.
I will probably wait until we break 3578 with a retest or come back down to 3410 with a resumption back up.
If you do want to take a long trade after today's retracement, I would recommend seeing at least an 8 hour green candle followed by another 8 hour green candle making a higher high.
Just keep in mind that you'll come into heavy resistance shortly after, so you should set your stop loss to breakeven once it arrives at 3578.
I'm not looking at any short trades at the moment.
Good Luck.
Note
By the way. Price on the daily & 8 hour candle still seem to show overbought. I will probably wait until the morning during the NY session to see if they provide the trade setup I described above. I think taking a trade in No Man's Land could be risky. Seems like an area market makers will try to hurt both sides if we stay in this area while trying to breakthrough all time highs again.
Note
Price continues to retrace/retest lower prices as anticipated. Waiting for price to come down to prior breakdown area (as marked on chart) for possible buy entry. I'm now waiting for a green 8 hour candle followed by a second 8 hour candle making a higher high. Will see if tomorrow or Friday provides the setup.
The market is definitely building to something big. Today's sell off was not violet. It was a slow, controlled drip. I'm not sure what market makers are planning but price is still bullish even after two days of selling.
If I had to guess, market makers are building energy to hit all time highs again. Just a guess. I rely on price action to provide me setups on both buy and sell side.
Stay safe and good luck.
Note
This week was interesting. Lot's of whiplash as I expected. The market didn't really provide any buying opportunities (or really any shorting - even though I was not looking to short this week). What did prove out accurate was my no Man's land and strong resistance drawn in. I think had we had more time this week, we would have seen lower prices (potentially to the breakout area that needs to be retested).
I will publish a new chart for next week after I do my analysis. Not sure if things will change from this current chart (it seems to be holding up good).
I may see if there is a short opportunity next week to include in my chart, but most large timeframe candles (Weekly, Daily, etc.) are still showing bullish, so that could be risky. However, after today's close, it does feel like there could be additional selling/weakness into next week.
Hope everyone else had a good week. I ended flat mostly because there were no trade setups that I wanted to take.
Have a nice weekend everyone.
Note
We made it back to the broken resistance that in the chart we would come back to at some point. Since we are still in an uptrend. I'll be looking to see if we bounce here for a possible long entry.
Otherwise there could be a short if we do not bounce off this broken resistance. Remember, don't play the breakout. Wait for price to break down below the broken resistance and for it to be retested as resistance before going short.
Trade active
Price gave a buy signal today. There was a bounce off the former broken resistance. I'm in at 3439 but I set my stop to break even since price came into heavy resistance about 15 points up.I'm not thrilled about the trade because there is a lot of whiplash at the moment. I suspect I'll get stopped out at break even, which I'm comfortable with. I'm not sure who is profiting from these sideways movements (maybe day traders and some swing traders).
If this gets stopped out, I'll wait for next week for the next setup. I'll post an updated chart.
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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.