SP500 has arrived to the very important support (Trendline + Kumo Cloud)
It is oversold on 4 Hrs timeframe and of course the lovely Turnaround Tuesday is very close, so I think people again will frontrun it and will buy already today. I recommend partial take profit on shorts, and put options and/or cover the bearish positions with 1720 June or 1750 May Short Puts (selling puts for premium). This is what I have done today.
My bias is still bearish, as I think mkts in general do not price risks properly. Let's say do not price any risks, not really sensitive to Ukraine or anything else. In a retest to 1840-1850 I will close these Short Puts, which means I will increase bearish position again, if the technical setup will be reasonable.
In line with this recommendation I do the same with my European shorts for now too. Please see the referring prev. trade ideas below.
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A-shot
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Are we still within the pattern? It closed a pinch above the supposed trend line and actually did a U turn yesterday
Kumowizard
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Now for short term I do not consider it as very bearish, daily Slow Stoch has become oversold. It has chance to go higher from here. We have to watch if it can go above 1866 (4 Hrs Kumo).
Looking at the daily, it is still a wide range trading. The lower support is the most important at 1810.
All indexes has to break together to see a real bear mkt and bearish trend to start.
If it reaches the 1866 or goes higher I will evaluate again the indicators and chart components. Meanwhile I still believe the best way is to play these choppy mkts is to trade through contract options. Somehow I sleep better with those. Or do a mix of options startegy and outright positions.
FYG now I don't have bearish positions left on equity indexes. (actually I have one smaller June Put Spread with LP@1840 SP@1720, zero cost.)
A-shot
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For once, markets did a U turn yesterday, a good dip and back up. Still, they are within the down trend to date. i would reevaluate the sentiment if they would indeed rise again on higher volume otherwise i suspect another mid week headfake. We have some large cap earnings today, so any of those can make a reason to sell.
A-shot
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Nice pairing. The 2nd chart still shows that we are not out of the woods yet, so i guess you are taking profits while people are buying. Ukraine is in tensions atm. But basically you are bearish in both US/SP500 and Europe/Stoxx50+Dax? Meaning you are already anticipating a total correction within the markets?
Kumowizard
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Well it is mixed if you look at Ichimoku components on the daily charts. Nas100 and DAX are already bearish. SP500 and Eurostoxx50 are not yet. I think the longer term outlook is still rather bearsih, but bulls will try to save equities here. That's why I temporary reduced shorts. What is really worrysome for the future is that the financial world cares less and less about risks in general. I mean last year when we had geopolitical tension in Syria, or the announcement of the taper by Bernanke, mkts showed bigger correction. Now even though we have more serious risk issues all around (Ukrain, China export and more importantly its import numbers, earnings, etc) mkts do not react so sharply, investors kind of ignore everything. People believe that someone will print money somewhere anyway, rates will stay zero forever, and that equities are the holy investments. Financial markets tend to move in the direction of the "biggest pain" in long term. So I still believe we will see a lot deeper correction, if not a collapse this year. What the trigger will be, I don't know. When it will happen, I don't know. But charts will guide you in time!