In reality, that could even be the bottom for the rest of 2021. Previous strong resistance in reality was just under 4000 so to me that's likely support ( false breakouts could be say 50 points ). I think 4000 area is always in play but so is 5000-5100 by January. 3400-3600 is not impossible but highly improbable without a new large negative catalyst. 5000 is actually more likely then 3500. So you have to ask yourself can you live with your strategy if we end up at 5000 in January. Loading up on inverses at areas where I think likely support exists seems problematic to me. Of course, things could change and opinions don't make money. But I use them as guidelines in how I swing trade and when to get out ( if my theory fails then there is something I don't understand and I need to get out better trades will arrive down the road ). Note that I'm not trading indexes right now it's just a benchmark I use to make sure I'm not on the wrong side of markets. All notes here expire early January.
By most traders definition $SPX short term is in a downtrend. LH's and LL's broke uptrend line, failed at downtrend line. Currently.
Good points, immediate trend is down, I'm mostly daytrading vs swings, but I expect to aggressively trade inverses if markets continue down. There's so many economic problems now I would be surprised to see strong equity demand. But I've incorrectly been thinking that for a year. I didn't factor in artificial fed pumping markets and printing money. Without that, markets are overvalued and way overdue for massive selling. Problem with trading selloffs is they crash so quickly it's hard to scale in and out for best gains. From a relative strength standpoint, TZA has had best recent move, inverse Russell. I'm also in KOLD/short nat gas, YINN/long China in addition to other inverses.
Still 3 weeks until halloween, my call, we are very close to a tipping point, we get another one of those March 2020 frights to excite the bears and scare beelzebub out of the bulls. But no long term damage, just a short term shitshow.
How do you distinguish this from the event that occurred late October 2020 ? So far it's very similar in nature and once selling pressure dissipated there were some excellent long opportunities,
Very true. I'm doing a lot more daytrading since that's my forte, vs forecasting market direction. It's just impossible for me to forget buying TVIX 56 selling 940 during the last selloff. Time to move on I suppose.
If I were forced to short something, I'd be asking what sector would lead a large corrective move. And that would be large cap IT ( maybe banks ? ). Not including semiconductors that have a global shortage. I wouldn't be shorting anything that has a global shortage coming or here ( eg copper, nat gas, semis ). UVXY is more like gambling but on a real catalyst sure pile a bunch of money in trade it to death. When Evergrande hit I couldn't believe you only did $1700 that was a real catalyst. That's a moment you need to seize with confidence; when the good Oil daily setups hit I was adding 40-70% to my energy cap immediately if I wasn't already fully invested. Make hay when you can and cut back when the theory/prices tell you it isn't working. Just guessing here I'm not actively shorting stuff to feel fully informed.
I still keep the shorts even though they didn't reach the target band of 4234-4245. But i have to admit downtrend is losing momentum each day where it fails to reach a new low below 4280. My stop level is the upper blue trend line. Which means even if i stop tomorrow, i'll still have profits https://www.tradingview.com/x/Ji54IMCc/
At Oct 2020, yes it crossed out of the channel but it failed to set a new low. Actually it barely reached to the low of September 2020. But now, it managed to get out of the uptrend and at 20 Sep it managed to go lower than previous low of 19 August. In October, it even managed to set a new low which i admit that i was expecting the band of 4250 and it failed to do so, this is a weakness for the downtrend. However, i try not to overthink about the markets direction. To be honest, i don't care about if this is a starting point of new downtrend that will crash the markets. What i care about is we're in a downtrend and its upper and bottom lines are known to me. This is the channel where i trade. I'll stop the shorts if it gets out the channel in either way. What makes me happy, i'll profit even if it gets out of the channel at the upper line today. If it does next week, i'll profit much more.