Morning Notes: 05/06/19 Trading Environment-Short Term: Current Environment-Neutral/Bearish
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Trading Environment-Short Term: Current Environment-Neutral/Bearish
Trading Environment-Short Term: Current Environment-Neutral/Bearish
Hi Everyone, FYI-we just published our premium report, which you can take a look at in the link below.
Futures are crushed this morning as traders were banking on some good news coming out of the China talks. This is the danger in trading wave 5's that are very mature. You don't know when or where they are going to end, but the ending is typically very close. I talk a lot about Woody's investor sentiment data he provides and how in almost every top/bottom, the majority were looking the wrong way. The same holds true for things outside of the stock market, but in this case, effected the stock market. Here is a news headline I picked out of zerohedge about the China news: "The market was caught on the wrong foot as everyone expected talks were heading in the right direction and almost close to finishing. This was totally out of the blue and the reaction is that we have more risk aversion today."
When everybody is expecting the same outcome, for some strange reason, they will almost always be wrong. Opinions and sentiment feed off of each other and more and more believe the people being cautious are the dumb ones, because everybody knows what is going to happen with the unknown. This kind of sentiment/belief has almost always lead to the exact opposite happening. Just ask our President ;)
Just last week, the market didn't see a reason to even start thinking bearish thoughts. The Fed said they were going to be market friendly, the China deal was just contract signing and the sky has never been clearer to just jump on the long side. This week, that same news that had the sky oh so blue, now has winds picking up dramatically and the rain is poring with the only unknown now, when will the sky become blue again. The Fed went a bit more on the hawkish side, which was unexpected and now we are back to square one with the China talks. Throw in some more tension in the middle east and we now have fear in the market. Every bull out there had an exit strategy and they were not going to get blindsided this time. As I have been saying, when everybody has the same exit strategy, it really isn't a strategy, it is a who gets out first, as there is only 1 exit!
As sure as the sun will rise tomorrow, I am sure this hard drop will end with bullish sentiment hitting 0 percent in the coming days/weeks. This isn't the "Kill Zone" drop. This is just a precursor of what is going to take place when that time period comes. The preferred profile has always been for a hard drop that could take the spx to 2810/2730-ish, followed by a face ripping short covering rally that takes us right into the "Kill Zone" time period. Everyone will jump back in on the long side and that is when we see that next mini bear market start. I say mini because I am expecting 300-600+ swings in both direction for the foreseeable future. (2022)
The range SPX range for today is 2908 high and 2899 low.(gap numbers) A break of 2908 the spx should try for 2918/2924. A push below 2899 we could see 2893/2882. G
SPX CASH 60 minute technicals
Stochastics: Overbought
Divergences- Bearish Divergences
Resistance Levels: R1-2908 R2-2918 R3 2924
Support Levels: S1-2899 S2-2893 S3 2882
Trending Pivots: Lower
If you like our post and would like to continue seeing them, please help us grow our network-Thanks You!!
1.) like our post with a thumbs up (each post)
2.) follow us-you will be alerted via email with each post we enter
3.) leave a comment (It could be as simple as Thanks) (each post)
Trading Environment-Short Term: Current Environment-Neutral/Bearish
Trading Environment-Short Term: Current Environment-Neutral/Bearish
Hi Everyone, FYI-we just published our premium report, which you can take a look at in the link below.
Futures are crushed this morning as traders were banking on some good news coming out of the China talks. This is the danger in trading wave 5's that are very mature. You don't know when or where they are going to end, but the ending is typically very close. I talk a lot about Woody's investor sentiment data he provides and how in almost every top/bottom, the majority were looking the wrong way. The same holds true for things outside of the stock market, but in this case, effected the stock market. Here is a news headline I picked out of zerohedge about the China news: "The market was caught on the wrong foot as everyone expected talks were heading in the right direction and almost close to finishing. This was totally out of the blue and the reaction is that we have more risk aversion today."
When everybody is expecting the same outcome, for some strange reason, they will almost always be wrong. Opinions and sentiment feed off of each other and more and more believe the people being cautious are the dumb ones, because everybody knows what is going to happen with the unknown. This kind of sentiment/belief has almost always lead to the exact opposite happening. Just ask our President ;)
Just last week, the market didn't see a reason to even start thinking bearish thoughts. The Fed said they were going to be market friendly, the China deal was just contract signing and the sky has never been clearer to just jump on the long side. This week, that same news that had the sky oh so blue, now has winds picking up dramatically and the rain is poring with the only unknown now, when will the sky become blue again. The Fed went a bit more on the hawkish side, which was unexpected and now we are back to square one with the China talks. Throw in some more tension in the middle east and we now have fear in the market. Every bull out there had an exit strategy and they were not going to get blindsided this time. As I have been saying, when everybody has the same exit strategy, it really isn't a strategy, it is a who gets out first, as there is only 1 exit!
As sure as the sun will rise tomorrow, I am sure this hard drop will end with bullish sentiment hitting 0 percent in the coming days/weeks. This isn't the "Kill Zone" drop. This is just a precursor of what is going to take place when that time period comes. The preferred profile has always been for a hard drop that could take the spx to 2810/2730-ish, followed by a face ripping short covering rally that takes us right into the "Kill Zone" time period. Everyone will jump back in on the long side and that is when we see that next mini bear market start. I say mini because I am expecting 300-600+ swings in both direction for the foreseeable future. (2022)
The range SPX range for today is 2908 high and 2899 low.(gap numbers) A break of 2908 the spx should try for 2918/2924. A push below 2899 we could see 2893/2882. G
SPX CASH 60 minute technicals
Stochastics: Overbought
Divergences- Bearish Divergences
Resistance Levels: R1-2908 R2-2918 R3 2924
Support Levels: S1-2899 S2-2893 S3 2882
Trending Pivots: Lower
