SNP500 ETF (SPY) – This is it! Shorting Time!

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I have been waiting for a right time to short the S&P500 ETF (SPY) and finally I found clear signals to short this ETF by buying PUT Option.

Bearish Signals

  • Evening Star candlestick pattern.
  • SPY was unable to break the 200D MA resistance and bounced down.
  • 20D MA is coming down very steeply to cross 200D MA.
  • MACD shows Bearish Convergence.
  • RSI and Stochastic started to reverse and head down.

I am expecting SPY to retrace at least 40% during this correction and my target price is $101.5 (38.2% Fibonacci Retracement Level).

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Review of Key Indices Patterns

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DOW JONES INDUSTRIAL

  • DJI is at the top of channel resistance. If the index cannot break this channel resistance (about 10,500), it may retrace back to 10,100 level (close to channel support) in the coming one to two weeks.

S&P500 (SPY)

  • S&P500 has a similar uptrend channel pattern as DJI. If the index cannot break this channel resistance (about 112), it may retrace back to 107 (close to channel support) level in the coming one to two weeks.
NASDAQ COMPOSITE
  • NASDAQ is hitting a critical resistance at 2191 level. It is important to see whether NASDAQ can break this resistance and continue its uptrend. 
Straits Time Index (STI)
  • STI broke the previous resistance of 2,734 and continue its uptrend in a channel. 2,800 is a key resistance level and STI may retrace back to 2,670 (channel support) if STI is unable to stay above this resistance level.
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Review of Key Indices Patterns

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DOW JONE INDUSTRIAL
 
 

  • DJI is still on the uptrend as the chart pattern shows the index is still having a higher high, lower high.
  • 10297 is a critical resistance and DJI has to break this resistance to confirm the uptrend is still intact.
  • 9916 is a critical trend support. If DJI breaks this trend support, the next critical support level to watch is 9710. If DJI cannot stay above 9710, it is confirmed that DJI up trend has ended and may start the down trend.

 

 S&P 500 (SPY)

 

  •  S&P500 appears to be forming a Double Top. Critical support is at about 105 (projected up trend support level). If SPY breaks below this trend support, SPY may be sent down to about 100 level.
  • 110.1 is the critical resistance.

 

 NASDAQ COMPOSITE

 

  •  NASDAQ appears to be forming a Head & Shoulders. If NASDAQ falls below 2041 (neckline) and stay below this level, H&S pattern is confirmed and may send NASDAQ down to 1893.

 

 Straits Times Index (STI) 
  • STI has a similar pattern to S&P500, forming a Double Top.
  • Critical uptrend support level is at about 2630. If STI breaks this support, the index may go down 2496 level.
  • Critical resistance at 2743.

Base on the chart patterns, DJI, S&P500, NASDAQ and STI probably will be bearish for the next one or two weeks. The market direction may be predicted depends on the patterns confirmation.

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