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S&P 500 Next Week Expected Move ($45) and Gravity PointsLeaning slightly bullish due to the weight of the evidence but there are too many binary events coming up in the coming week that could throw off my thesis. Plus we rallied so strongly the last 3 weeks that I wouldn't discount the fact that the market might just consolidate while it waits for the G20 meeting. Blew through last week's expected move ($41) and had a $63 gain on the week. This next week the options market is pricing in a $45 move higher or $45 lower, nondirectional. Amazingly, for the first time in 18 months I have no Gravity Points lurking above us to target. They have served me very well and I hope they have for you. I will continue to locate Gravity Points going forward as we make them. Many significant things occurred this week. I'll list those I'm aware of: (Negative) - Economic data is now definitively weakening - shown by the Empire Manufacturing Data and several others (Positive) - The Dollar; $DXY, $UUP is on the brink of breaking down (Neutral) - Most interestingly; $GOLD, $GLD is breaking out of a 5 year base which adds to the bearish case on the USD (Neutral) - I think Small Caps $IWM might turn the corner and start leading relatively soon here, the ratio between the $IWM and the $DIA is at the low end of its historical range, however my two favorite market leading indicators the IWM and DJT weekly charts failed at the moving averages and is nowhere near all time highs which is bearish. (Positive) - Market Sentiment is very neutral, which is odd given that we are making new all time highs and a positive omen going forward (Positive) - Copper is staging a bullish reversal which is a relief for foreign equities (Positive) - OIL; $USOIL is staging a bullish reversal which is also bullish (Neutral) - Quadruple Witching occurred this week which means there's a lot of rebalancing going on (Negative) - The $VVIX and $VIX are both back to considerably low levels (Neutral) - The correlation between bonds and stocks is very high and unsustainable; typically I trust the debt market over the equity market but not this time (Positive) - Bonds; $TLT created a significant bearish divergence after rallying for nearly 20% in 6 months (Positive) - Related to the TLT, the $TNX had a capitulation low at 1.95. Now that the FOMC is out of the way, I think bonds will stop advancing in the near term. Scorecard: Bullish - 6 Neutral - 4 Bearish - 2 Last Week's Post: I'm not sure if this makes any difference for getting this post out there or not but I'm going to try it out anyways. Don't know how the system works. $SPY SPY $ES1! ES1! $SPX SPX $DIA DIA $QQQ QQQ $NDX NDX $IWM IWM $RUT RUT $IYT IYT $DJT DJT
CME_MINI:ES1!
by RHTrading
1
S&P Next Week Expected Move ($47.25) and Gravity PointsNeutral Call. I think the ' h-Pattern ' we have here will provide a nice bump in price but I think selling pressure will keep the market relatively rangebound especially during next week's shortened 4-day week. Our Standard Deviation trend lines have been working quite well. I believe we have enough data to call them reliable. I highlighted in a green circle what was a nice trade setup that I missed. Had a confluence of support there from the Gravity Point, Expected Move, and SD after the completion of a 5-wave move. Best of luck next week gentlemen and have a nice Memorial Day weekend! - RH $SPY SPY $SPX SPX $ES! $ES1! ES1!
CME_MINI:ES1!
by RHTrading
2
SPY Next Week Expected Moves ($52) + Gravity PointsLast week's call had me nervous for a second there. A very chaotic week, but I had several opportunities to put on a couple positions. Hats off to anyone who waited for that upper expected move. (two opportunities) Large expansion for the expected move from last week to this week = expect volatility to pick up. Couple quick notes: - 10 yr / 3 mo yield inverted. You now are paid more to buy a 3 month bond than a 10 year bond. Fundamentally this makes no sense because you should be compensated for the additional risk of loaning your money for longer periods of time. Ill share some of my excel doc data of different yield curve pair inversions for the 10/3because it's so important: ---> 10 yr / 3 mo yield inversion time prior to next Recession: Average = 13 Months ---> S&P 500 Peak to start of recession percentage gain/loss: Average = -13.3% Median = -13.5% (Most losses happen prior to official recession) ---> S&P 500 percentage gain/loss during Recession: Average = -1.3% Median = 6.7% ---> Number of Months from Peak to Recession: Average = 8.7 months Median = 8.5 months ---> Number of Months in Recession: Average = 13.5 months Median = 10.7 months ---> Recession Start to S&P 500 Trough: Average = 8 months Median = 5.3 months - Powell signaled to the market that the economy is weak - Germany slowdown bad Friday morning manufacturing report - China slowdown - Brexit delated but nowhere near resolved Best of luck next week gentlemen - RH P.S. Wish me luck on my Series 7 exam on Friday next week!
CME_MINI:ES1!Short
by RHTrading
Next Week Trade Plan: $82 Expected Move + Gravity Points + ExtraFor what it's worth, I don't have any Gravity Points identified under the "Gravity Point Very Hard" Chart Dump this week. See what I see. Last Week's Post Other Relevant Charts: (One Last Rally) (Interesting Development) (Kings Crown) (Extremely Useful) (Combo Equal-Weight Indice Chart) (Extremely Useful) (Should've made it public) (Semi-Useful) (Just for fun) Sector & Indice Trendline Watch: I use a fan of different trendlines from different anchor points (candle wick, candle body, Day prior, Day after, ect.) and connected them in a similar way to 2015/2016 Lows to capture a more complete picture of the trendline. That way I'm not second guessing if the trend is broken or not because I have all of the possibly variations already displayed. See Below: Indice: (Broke?) (Very Weak) (Hanging on) Sector: (Strong) (Very Weak) (Struggling) (Broke) (Still Well Above)
CME_MINI:ES1!
by RHTrading
4
S&P 500 Trading Plan: $47 Implied Volatility + Gravity PointsLast week's Implied Volatility was $49. This week's Implied Volatility Expected Move is $47. So another volatility contraction right? Wrong. We've got a holiday next week folks and we've got three and a half trading sessions. Given this, I'm inclined to say it's going to be a pretty volatile week. I zoomed in to the 15 minute time frame here, as opposed to my usual 30 minute chart because I wanted to show just how extremely accurate and important these Gravity Points have been for weeks and weeks now. Use them. I intend on making another 30 minute time frame just for continuity and bigger picture. Last Week's Trading Plan: - Incredible action last week here. - On the button we came back inside of the Implied Volatility Expected Move.
CME_MINI:ES1!
by RHTrading
S&P Expected Move ($65) + Gravity Points -Next Week Trading PlanIt's getting dicey out here. Huge moves in the market this last week. Last week $90 expected Move. We moved all of that and then some. Next week only a $65 expected move. We saw that kind of action in the S&P's on Friday. All of next week, we're supposed to move $65, but we did that on Friday. I anticipate the price action will move OUTSIDE of the expected move. Here's a more "Busy" chart on the 15 minute for active traders: Good luck next week gentlemen, - RH __________________________________________________________________________________________________________________________________ Some other work I've done recently: Redid my trendlines for the 100th time. The two multi-trendlines and one final trendline from the (2009 Low - 2016 Low) & the (2009 Low - 2nd 2016 Low), (2009 Low - 2018 Low); This is a big deal. https Recognize that if this breaks, it will be resistance on the way up.
CME_MINI:ES1!
by RHTrading
One of DJI's Confirmations Not Looking Good - DJTAs is suggested by the heading even though we're seeing a rebound of DJI's rally one of it's confirming indicators is showing weakness. For the most part we use the Dow Jones Index as loose indicator of the overall economy, when it's performing well, on it's face, we discern that the economy is humming along well. As a confirmation for the thought process we use the Dow Transports Index, among others, and discern from if the rally is real or not. The reasoning being, as an index that follows the biggest transporting companies within the economy, it's reasonable to think if transports are performing well then commerce within the economy must be doing well. So, when DJI is rallying and it's confirmed by the DJT, along with other factors, we can discern that the economy is performing well. I'll move onto the analysis, to explain how the index is tracking. Weekly 1. Noticed that there's been high volume in the last two years of trading relative to long-term trend, 200-moving average. 2. It's been trading in a channel YTD which is confirmed by relatively accurate tracing stochastic indicator. Daily 1. Within the YTD channel, there's an interior resistance that's quite robust. That's where we find the index, today-July 25, 2018, and as with the other reactions from that interior resistance it's retracing back to the bottom of the channel. 2. The Stochastic indicator is tracing accurately with the index, which is on tracing downwards confirming the hypothesis. Conclusion: The Dow Jones Index has been on an upwards trend but one of the confirming indicators is showing that that might be a faux-upswing. In terms of the overall economy, we're starting to see that the market starting to be affect by the tariffs and the trade war.
DJ:DJT
by ReadySetBudget
The trend is still lower!SPX has been a wild ride... even experienced traders like myself have been getting pushed around, stopped out, and left scratching our heads trying to make sense of this market. It's times like these that it's important to remember that the "why" isn't that relevant to us from a trading perspective. Technical analysis provides unbiased, objective, and most importantly, unemotional analysis that can cut through the headlines and tweets to help us position ourselves for the next move. Of course we may end up on the wrong side, but you have to think in terms of probability. For example, if there's an 80% chance of a decline versus a 20% chance of moving higher, which would you pick? I also want to note that while most are intent on blasting Trump and the shit with China, that's not what started this mess. If we're being fair, the market is still up over 22% since his election even after the recent selloff. In fact, the catalyst that initiated the selling was actually a labor report that indicated wage inflation was picking up, which in turn may make the Federal Reserve tighten faster than the market expects. The headlines about trade wars and whatnot certainly didn't help, but they were absolutely not what started this move down, so don't be a sheep and believe the "Trump tanks markets" and "Trump doesn't care about investors" headlines... those are designed to sell news, not report facts! Anyways, rant aside, the current trend is lower, therefore rallies should be sold until there's some indication that the trend has changed. I also want to note that the market has respected the Fib levels damn-near perfectly. As such, I see major resistance at 2663 and support at 2533-2554. Given the price action, I think that support fails and we make a new low. I have downside targets at 2459, 2421, and 2366 for the next leg lower. Whether or not that's the bottom will only be known once we get there and have more data to use. Finally, I want to say that there are opportunities in a declining market, so don't think its time to sell everything and move to Utah in a bunker. However, if you're portfolio consists of only index funds and the like, I urge you to reconsider carrying such concentration risk and to use this time to rebalance your holdings and pick up some undervalued assets, as its the only way to outperform the market! Happy trading!
SP:SPXShort
by EchoAlphaBravo