SPX - Analysis and Thoughts

15 ธ.ค. 2015

SPX



The chart contains fibonacci retracement levels from 3/2009 bottom to 5/20/2005 peak. I used 3/2009 since that truly is the bottom since this uptrend began.

Further confirmation of ongoing analysis. My hypothesis...unless an abundance of evidence to the contrary, I believe the market is primed for a significant downtrend/retracement or at minimum an extended ranging market. Monthly chart is very telling. Bearish divergence (RSI) started mid 2014, long-term trend line break down, etc. etc. etc. all indicating the Bulls are losing steam/control and the Bears are building traction and prime to take control. I expect the Oct 2014 and recent pull backs were just a taste of what is to come.

The U.S. market (SP500) has had tremendous growth since the it bottomed 3/2009, almost 7 years ago, at 666.79. If someone had perfect timing and invested in SPX 3/2009 at the very bottom and took their money out at the 5/20/2015 high, they would have experienced around 220% growth (around 19% annualized over 6.17 years). Not too shabby. 2015 is at risk of closing with SP500 down for the year. If that occurs, it will be the first time since a basically flat growth in 2011. Are we due for a significant correction? Are we past due?

The market could continue to push higher, but I expect further correction over an extended period of time. It remains to be seen if it will simply be a consolidation (ranging) followed by continuation to higher highs. Or a multi-year downtrend with lower highs & lower lows. Eventually retracing to 1600 would not be a surprise. I've been and plan on continuing to short moves higher (via options).

I've been selling SPY Calls and my current holdings are short at $211 (Feb 2016 debit call spreads). I have also purchased credit put spreads, but have had little success due to purchasing expiration dates that didn't allow enough time for the needed movement.

This post is not meant to be a trade journal or to provide any specific trading advice. Simply posting my observations.


I welcome your thoughts.