The first thing I see is the symmetry of the moves. A-b-c were basically the same move, just one to the upside and one to the down. If it were to continue to hypothetical point "d", it would end up at the price target I already had for this chart (See my SPX Bump n Run Pattern Chart). The convergence of this, the 200EMA, and my prior price target makes me think it is more likely then not.
Adding to this is the fact that friday's bullish run came on mostly weak volume, especially considering the strong bout of volume that came in the previous selling. The 5 Min MACD is showing bearish divergence, and I tend not to bet against the 5min MACD when it tells me anything. Considering these facts, I believe the short term bullish move is nothing more then a bear flag.
From the fundamental side, we've got TRAADE WAR scares. What fun! Just from a probability standpoint, I would say the midterm risk outweighs the reward when it comes to the possible trade war effecting the stock market. Furthermore, what happens if it turns out there will be no trade war, will the market jump right back up to prior highs? I don't think so, I think if that happens, we've still got an extra rate hike and/or a flattening yield curve to scare people out of buying. To me, this seems like a market running out of good news. From this logic, I believe there is more to gain from being short the current market then being bullish towards it. I am still short and holding until around the 200EMA, with a stop loss if we cross above the 50 EMA (which is where I averaged in my position at). I will re-evaluate when either of those happen.
Overall: Short.
Disclaimer: This is not investment advice. I am not an investment advisor, i'm just a dude with internet access and some time on my hands. This is for education only.
Adding to this is the fact that friday's bullish run came on mostly weak volume, especially considering the strong bout of volume that came in the previous selling. The 5 Min MACD is showing bearish divergence, and I tend not to bet against the 5min MACD when it tells me anything. Considering these facts, I believe the short term bullish move is nothing more then a bear flag.
From the fundamental side, we've got TRAADE WAR scares. What fun! Just from a probability standpoint, I would say the midterm risk outweighs the reward when it comes to the possible trade war effecting the stock market. Furthermore, what happens if it turns out there will be no trade war, will the market jump right back up to prior highs? I don't think so, I think if that happens, we've still got an extra rate hike and/or a flattening yield curve to scare people out of buying. To me, this seems like a market running out of good news. From this logic, I believe there is more to gain from being short the current market then being bullish towards it. I am still short and holding until around the 200EMA, with a stop loss if we cross above the 50 EMA (which is where I averaged in my position at). I will re-evaluate when either of those happen.
Overall: Short.
Disclaimer: This is not investment advice. I am not an investment advisor, i'm just a dude with internet access and some time on my hands. This is for education only.
