Free falling S&P 500 "Where's the bottom?When's the end of fear"

10 de mar. de 2020

Hello traders,

Today, I wanted to briefly share and talk about our stock market, S&P 500. Today, we had circuit breaker which is historical and has a lot of meanings. I'm not going to talk about whether this downward pressure comes from COVID-19 or oil price war because none of them are my trading criteria. But as the title says, there's one thing that makes me like "hm.. this is interesting enough to watch for the next few days/weeks". So I'm writing this.


As y'all know, Warren Buffet says "Be greedy when others are fearful, be fearful when others are greedy". I personally think that this exactly applies to current situation. I really want to ask if he's buying these days or not. I'm sure he is though.

So let me go straight into the main point.

We have a upward trend line as you can see on the left chart, from the beginning of recovery in 2009. Since then, we haven't even touched it before until Jerome Powell, chairman of central bank, raised interest rates again during December. It was a big short opportunity to me as it completed bearish rectangle.
And finally today, this is 3rd time that we touched this trend line again. Since it's been almost a decade, we need to see this on Monthly chart. This means one thing. We still have 21 days to complete this candle, March. This implies that more than likely, we will not see price landing on this price. Either it bounces back and shows recovery as it did before 2 times, or officially announces to the world that 'Hey, this drop so far? this is just the beginning. Let me show you some thing cool" and start historical sell-off.

It is no surprises if we have historical sell off due to the fact that we had a historical bull run.



I personally switched my position from short to long at the end of today right before market close. I'm not saying or even believe that tomorrow's bounce, if happens, will take me straight up to the all time high. It requires confirmation of changing velocity during the process, which is my buy criteria. I'll look for another opportunity but more than likely, this trend line is obviously interesting to watch.


Thanks,



After all, only Traders who have right strategies that penetrate markets will survive, not people trading with luck or without criteria.

10 de mar. de 2020

Nota

Forgot to mention due to limited time,

In order to change its downward trend (velocity), we must have an inflection point as well as price rising above the red&blue line on the right hand side chart.

3 blue vertical lines are indicating accumulated resistance from the past.
When we have a sell-off and enter recovery phase, most likely, majority of resistance (I often describe it as 'wall') can be broken very easily.