SPX Bear Put Spread

How to view the entire chart:


1. Try clicking on the name of the most recent article in the column on the right. This will remove the "Archives" list.
2. Try right click on the chart itself and open it on a separate window.


I am sorry that I cannot always make the chart small enough to fit neatly on the left column. I want you to be able to see the details I want to point out.


I Hope this helps,


Juan

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I have entered this short-term trade on the SPX. This follows the same strategy you have seen me trade, using the Stochastics oscillator both daily and 60 min charts. More details will follow, including Elliott wave analysis.


First, the conventional TA analysis:


The SPX has been rallying lately, hitting the top Bollinger band. There seems to be resistance at the highs of early June. Note that this less than 61.8% retracement of the May-June decline. The Oscillators are giving me sell signals, particularly the stochastics is quite clear. Entering a position like the one above is very short-term and requires an approach involving the 60 min chars. However, I DO require a negative tone in the daily chart. I think we have that.

The 60 min chart has given me a short-term sell signal, based on the Stochastics. Incidentally, there are lower highs and lower lows in the last few days, and the failed follow through from yesterday's rally. SO I made up my mind to enter the bearish trade. A usual, I will be looking for a bottom or a buy signal in the stochastics, in case my plan does not work.




The short-term Elliott wave analysis is bearish too. The incomplete Elliott sequence, starting at the highs of May seems to be a double zigzag (WXY) sequence. The first zigzag (W) was completed in June, and the pullback may be completed now (top of early June). The chart below shows the targets for wave (X) having been met. Unless wave (X) becomes more complex, the beginings of the last wave (Y) of this sequence may be already underway, and may result in a breakdown of the support at the June lows at 1219.


I only play directional trades very short term, as you know, so I am standing by with this trade. If I am correct and the breakdown occurs, it may take a couple of weeks, as you can see, my trade expires next week. I doubt that I will be holding until expiration. BUT the payoff will be large if I am correct. Here is the risk graph.