Lately, SPX500 has been extremely hostile to bulls and bears alike. When it sold off abruptly on Friday after Trump's tweet that US companies 'are ordered' to look for an alternative to China my initial reaction was to go heavy short. However, I think I was wise enough to close most of the shorts before the bell.
What nagged me was that - I was missing that final 5th wave to complete ABC formation. - also, the fact the market shrugged off fundamental news (Chinese tariffs) and sold-off on just another tweet which has no legislative/fundamental meaning seemed to be an overreaction.
Having studied the charts I think we will have another leg up in the coming week(s). Waves E tend to be very extreme so this move can be very painful for short-sellers.
The trading strategy would be 1. open longs on Monday open in CFD market (25% of future total position) 2. add another 25% longs if the price declines to 2849.6 (50% retracement of the bounce before the bell which I think was wave 1) 3. double the position if there is a clear wave 1-2 pattern and if the price moves impulsively beyond wave 1.
Commento
⋅
expecting something like this but can come out in a different form of course. Now I am scalping these minor ABC waves.
Hi Deus, I love your charts which I follow to get ideas, however I would suggest you put in context the interaction between gold and SPX500, gold goes up when SPX goes down with amazing precision, gold is doing its 4th leg downward (of the 5th and last leg up), and spx is retracing accordingly upward, therefore I think there will be 1 more leg (up for gold, down for SPX500), after which gold will have hit the 0.618 fb retracement on the long term (if this is a long term ABC acoorection), so my idea is that at that point SPX could possibly start to go long as gold slowly falls toward 900/88 or so. In this case it means SPX is actually finishing its ABC retracement of the first leg of a new cycle (being december 2018 the end of the first 5 legs cycle), hope makes sense.
Fomenka
⋅
@ChaparroLB, thank you for your words. Keeps me motivated to post this stuff. Not only gold but oil is also synchronised currently with SPX. I am a bit wary of such correlation as it can go anytime. If sh.i.t hits the fan gold can fall as well. However, I do not have wavecount for gold which is good enough to trade. The one I have I do not like, hence I will not speculate now. But I am continuously watching gold trying to find a count I will be ok with.
Could you share your idea in a chart? Sorry, I must admit I did not get the bit about ABC in SPX.