SPX SHORT - JULY 2022

On the back of good employment figures from last week, price action shows a likely leg down for the S&P500 as we end the bearish run in the near term.

The lows of 3866 from Friday July 8 might be tagged early this week of July 10. If we see a liquidity hunt there and subsequent rally, look for the highs at 3949 to be taken. My idea is that this will lack follow through and result in the beginning of the next leg down to approach 3500. My entry short will be at 3948-50 and stop loss 4050 with targets at 3900, 3860, 3800,and 3500 in extension.

One alternative scenarios is that the break of July 8’s low has follow-through to the downside and not enough bulls to retest 3948. In that event, I’ll be looking for sells with targets above.

Another alternative scenario is that the break of 3948 does show follow-through, in which event we’d look for a lasting move above 4000 to invalidate the trade idea going short, and turn me into a bull looking for longs.