Sentiment ping-pong

As the bearish setup we introduced last week was not triggered, we continue to watch the SPX on the sidelines and wait for a better trade opportunity to emerge. In the meantime, we want to highlight a persistent positive correlation between the U.S. and Chinese markets. It is amazing how, once again, the reversal in the Chinese stocks preceded the same price action in the U.S. stock market (by just a few days). Therefore, we will keep paying attention to what is happening overseas in the foreseeable future as well. With that said, we will update our thoughts on the asset with the emergence of new developments.

Illustration 1.01

Illustration 1.01 shows the daily chart of the SPX and simple support/resistance levels. If SPX breaks above Resistance 1, it will further bolster a bullish case in the short term. However, a failure to break above this level (and hold above it) will raise our suspicion about the potential reversal.

Illustration 1.02

The image above displays daily charts of the HSI (Hang Seng Index) and the SSE (Shanghai Composite Index).

Technical analysis gauge
Daily time frame = Slightly bullish
Weekly time frame = Bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

Commentaire:

Here is an aggressive setup for trading a potential reversal (at the current price); though the ideal entry would be if the price broke above the upper bound and invalidated a breakout after that.