Friday May 6, 2016
Key Developments :
- S&P 500 Finally Acquires it’s 2043.99 Downside Target
- Market oversold, looking to bounce off the targets.
- I took my CMG long off this morning as it did not hold my level. Will continue to watch it.
Finally. The S&P 500 acquired it’s downside target of 2043.99. If you read both last nights report and my morning analysis you know I was preparing to get long and I did just that, I am now bullish. I want to be looking for longs, particularly above today’s lows. A pull back Monday would not take me off guard but will be looking to buy that dip against today’s low. If today’s low is taken out, we will have to re-evaluate our position.
I got long some 208 call options near the lows this morning because
1) I thought my downside risk was 203.
2) Market was massively oversold,
3) The target was acquired and there are 2 upper gaps to fill.
I expect them to be filled between now and May OPEX on May 20.
I could not see any way the market was cracking that with the oversold conditions. I am holding those as a swing.
As you can see by the chart below, after acquiring the target, we now have a reversal pattern to trade with an upside target of 2075.97.
The Bottom Line:
With the exception of the DJIA all indexes have acquired their targets and are massively oversold. I am looking now for a bounce back into the 208 level of the S&P. This will form a larger right shoulder for a bigger bearish play.
I am near term bullish above today’s low, but as we approach 208, I will be looking for a place to get long. If today’s low is taken out, we will be much more cautious on the long side.
Chart of the Day:
DJIA Has not acquired it’s downside target. This has me cautious about my long SPY call position, but holding them as they are well in the money.