#202432 - priceactiontds - weekly update - sp500 e-mini futuresGood Evening and I hope you are well.
tl;dr
Climactic selling below the possible bear channel. I do think a bounce is more likely than another strong bear day on Monday/Tuesday. Can go a bit lower to 5270 but we will touch that upper bear channel again or at least the daily 20ema. Bounce could go as high as 5500 again. Best case for bears would be to stay below 5450.
Quote from last week:
bear case: Bears see another minor pullback which could not even get to the daily 20ema at 5640. They want another strong leg down to 5300 to make it clear that the bull trend is dead. It’s not out of the picture that they get it. Probability wise, it’s more reasonable to expect the bull trend line to hold and at least go more sideways before another leg down. Issue with that is, that next week we have so many news that will have a big influence on longer term traders, that we will most likely go higher than 5500 or lower than 5400. For bears it’s a really bad short right at the big support. You can scalp short on strong momentum again but bears will likely wait for a pullback before they try again. My preferred path forward is the bear channel on my chart below.
comment: Everything about this possible new bear trend I already wrote above, no new stuff to add here.
current market cycle: Bull trap triggered on 2024-07-17. Probably forming a trading range first before we get to the bear trend. First guess for the range would be 5300 -5600. On the weekly or monthly chart, the selloff during July/August will be the first leg of this bear trend.
key levels: 5400-5600
bull case: Bulls got a huge bounce last week for 169 points but the bears sold it violently again for a 269 point drop. Not stuff that happens during bull trends. Bulls are running for the exits and I do think market won’t get above 5600 anytime soon again. Bulls best hope now is to go sideways and turn the market neutral again.
Invalidation is below 5300.
bear case: Bears made it clear that this bull trend is over with another huge bull trap. Right now the channel down looks decent enough if we ignore Friday’s tail. Bears could force another drop to 5300 early next week but I think a bounce and more sideways is more reasonable to expect. I am very confident in loading up on shorts on the next pullback and hold until we hit 5000/5100, which will likely happen over the next weeks/months.
Invalidation is above 5600.
outlook last week:
short term: Neutral. Both sides have valid arguments. Will make this dependent on earnings and will only do scalps for now. Market has to form a better channel if it wants a sustained down move.
→ Last Sunday we traded 5499 and now we are at 5376. Market started neutral and had big two sided trading, so outlook was good.
short term: Full bear mode. Pullback is expected and I will load up on shorts. This will go much lower in 2024.
medium-long term: 5300 over the next weeks (will likely happen in August). Afterwards another pullback before we go down to 5000/5100 in 2024.
current swing trade: Out of all shorts which I had since 5700. Will load again on anything above 5500.
chart update: Bull trend line now clearly broken but bear channel stays for now. Removed bear gap #2. Whenever you see many lines in an area on my charts, it means that much happened there and it’s an area of importance. Expect pullbacks/bounces in those areas. Adjusted the 50% pb from 5601 to the recent low 5331.
