Since this Wednesday (Jan 24) the "S&P 500" is starting to get weaker and weaker. The weakness increased on Thursday even more. I remain with my overall bullish outlook towards 3000 points, which I had shared in my last chart analysis. But before the next big push higher the odds for a pullback is increasing on various momentum, rate of change and stochastic indicators.
Short entry: 2845
Stop loss: 2860
1. Target: 2810
2. Target: 2795
Risk to stop loss: 15 points
Reward to target 1: 35 points
Reward to target 2: 50 points
Short entry: 2845
Stop loss: 2860
1. Target: 2810
2. Target: 2795
Risk to stop loss: 15 points
Reward to target 1: 35 points
Reward to target 2: 50 points
My theory was that this weakness could increase on Friday due to various reasons: For example Trump said yesterday at Davos that he now wants to see a strong US Dollar and this could weigh on stock prices (currently the falling US Dollar price is helping to lift US stocks upwards). Another reason is that the the Dow Jones Transports index was the last days increasingly weak. This index is seen as often leading the direction of the Dow Jones, which implied upcoming weakness for the S&P 500. And also the XIV, the inverse volatility ETF (which most of the time trades in the same direction as the S&P 500) had gotten as of yesterday, when I had shared my bearish outlook, far weaker than the S&P 500, which is very unusual and was another red flag and risk factor.
But in the end the futures traded today higher pre-open and then I wanted to see if the market starts to immediately to plunge lower towards the new gap, before going short and therefore marking this trade idea as active. But there was no sell-off. Instead the market repeated a bullish fractal of a price movement it did a few days ago and moved relentlessly higher and higher, yet again.
2866-2867 is a price target of some traders, therefore I need to see more price action the next days before I can strongly recommend to go long at this overextended superstretched high altitude.