Far too many variables are at work as SnP500 approaches the 1,900 level.
As indicated in my March 4 Instablog; finding the top run of this rally, from the June 2012 higher low bottom, is of critical importance for medium-term traders with 1,905 the maximum allowed limit for the SnP500 Conservative Scenario:
<< SnP500 Daily Bearish View: img15.imagefra.me/i547/jquint84/141u_8d1...
<< SnP500 Weekly Bearish View: img10.imagefra.me/i747/jquint84/141u_faa...
For the Bears: The Daily Double Divergence Sell Signals triggered last Friday. The Weekly Double Divergence Sell Signals triggered today.
For TA traders, double divergences are better/stronger than single divergences in causing a trend reversal. A Triple Divergence Sell Signal, is of course, the wet dream for contrarian traders - but this scenario happens much less often.
For the majority of short-term to medium-term Trend Traders; it is better to exercise at least a modicum of caution right now.
For the Aggressive Short-Term Trend Traders; the Trend is still a Friend until it is no more:
>> SnP500 Daily Bullish View: img15.imagefra.me/i348/jquint84/141u_828...
>> SnP500 Intraday Bullish View: img15.imagefra.me/i547/jquint84/141u_f17...
Obviously, the warning last Feb 20 that majority of value traders would not support another rally so soon come into fruition as SnP500 whipped around for more than a month of shallow pullback of less than 38.2%. IF SnP500 breaks the Major Support the next support is the 38.2% Retrace at 1836 but better expect it not to hold and an equal move target of 1825 should be the better target for an Expanding Flat with 1817 the last resort support. Below 1817 and the pattern will become > 50% bearish.
For short-term intraday traders the rally off Feb 5, 2014 failed to become an 'irrational exuberance' rally but instead become a prolonged skepticism consolidating for more than a month. A shallow pullback far too shallow for majority of value traders to support.
- Now that SnP500 finally is testing the Daily 50ma Support there should be much less skepticism in the days ahead if SnP500 rallies. Thus, hold on tight if SnP500 decides to rally.
- Likewise, a heavy breakdown below the 50ma can easily result in massive pessimism among short-term traders. Don't try to be a hero here if the 50ma breaks down. Not making money or losing a small amount is considered a very important part of trading. In far too many cases; a single trend reversal can cause losses greater than the profits derived from several trend trades if hard stop loss is not applied.
- As in always, value contrarian bears will be expecting a bounce up of SnP500 toward the right shoulder resistance of 1883 for a Head and Shoulders Pattern. Lower if SnP500 decides to break the intraday Major Support of 1839 tomorrow. Thus if SnP500 makes a crappy (slow grinding) intraday rally toward 1883; the better course of action is to at least try shorting the markets for a Swing Trade to the downside.
For short-term trend traders; buy entry strategies are as specified on the daily chart. Fine tune using intraday charts. 1817 is the critical level SnP500 must not breach if the upside trend is to remain highly viable for the bulls. A hard break below that and the situation can suddenly change from bullish to bearish on the intraday chart.
* For Swing Traders and Medium-Term Traders: This is a good place to take some more profits off the table. Thus for those who held on to their positions using the June and/or Nov 2012 Spiral Meltup Buy Setups; taking some more profits off the table can be considered a practical or defensive trading strategy. We can always make another Swing Trade if SnP500 decides to test the 200ma Support.
For me.: Half my positions using trailing stops got stopped out last Friday and they were profitable. I decided to use hard stops for the rest. I bought back the other half today with stop loss below today's low. A highly speculative trade that I am willing to take as long as I can control the losses to the bare minimum. If SnP500 decides to form an Expanding Flat, then I would be buying that as well.
For those who exercised precision buy entries in the past month and used the SOP Trailing Stops for Daytrades; then they should have made some reasonable profits over-all at least twice and some small losses for those who used hard stops (once). The 5 days rally from March 27 can be chalked up as another successful Daytrade albeit a far cry from the 7 highly successful daytrades illustrated on my Instablogs since June 2013 = that lasted at least a few weeks.