Sunday, February 1, 2015

The Blue Line In The Sand

SGS Market Timer Status:   SHORT 
Short as of close of 1/20/2015

RTS Current Portfolio (2015)

There is an ominous looking Head and Shoulders Top (H&S Top) formation on the SPX daily chart.  The neckline for that formation was tested four times last month and it held.   Last Friday, SPX tested the neckline again and closed right on it which was incidentally a weekly close below 2000 since late October 2014. 
  • Bear Case (90% imo): SPX sells off early this coming week and penetrates the neckline and closes below it.  That would signal an excellent chance of more selling to test 200 D-SMA (SPX 1975) and PUL's (around SPX 1900).

  • Bull Case (10% imo): Support at the neckline holds and SPX rallies to close above its 50 D-SMA on the back of extraordinarily strong seasonality.
As a trader I have to go with the better odds.  My plan is to do my 2nd round of short selling, but only in SPX and QQQ (equal $ amounts) early Monday morning.

SPX: S&P 500 Index    D-SMA: Daily - Simple Moving Average
DJI: Dow Jones Industrial Index    D-EMA: Daily - Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ADL: Active Downtrend Line
OEX: S&P 100 Index    AUL: Active Uptrend Line
NDX: Nasdaq 100 Index    DTL: Dynamic Trend Line 

Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.