Profit taking and light volume has helped pushed the S&P 500 20 points lower from the close last Friday. The index has closed lower on the last four sessions, dipping below the 1430 level for the first time in nearly two weeks. I am looking for the bearish trend to continue.
ALL GOOD THINGS COME TO AN END
The rally in the S&P started at the beginning of the month, coming off a sideways move for most of August. The market put in a high of 1468, capping a nearly seventy point move in ten days. As traders, we know that all good things come to an end, nothing lasts forever. Sideways trading followed the new high for a few a few sessions, before heading into the recent sell off. We may be setting up for a head and shoulder pattern.
Look for the market to straddle the 1430 level. If it can stay above 1430, I'd look to take short positions from 1433 to 1435. If resistance holds, watch for the market to come back to test the pivot at 1430. Traders looking for larger gains should look to cover in the 1427-1429 area. A strong sell off could see the December E-mini S&P test the 1420 level.
THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES. A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.