Time To Go Short! E-mini S&P500
Tim Knight | Feb 17, 2015 03:15AM ET
Dear Slopers, finally it’s a good time to go SHORT!
Let’s re-cap what happened in the last few weeks: on January 15, 2015, we posted a report where we recommended to our paying subscribers to go LONG, because our Retracement Levels DAILY+WEEKLY+MONTHLY combined LONG models were showing an OVERSOLD condition and good chances of having a LONG reversal.
Here below is the chart that was published in our report on that date (the gauges at the bottom of the chart indicate how much the market is oversold at the levels indicated as “BUY”, for each time period):
Fast forward one month and we are now at a point where DAILY+WEEKLY+MONTHLY combined SHORT models are showing an OVERBOUGHT condition and good chances of having a pullback reversal. Here below is the chart for today that shows how the market went up from our recommendation one month ago and how it became quickly overbought:
If you are a short-term trader, this is a good occasion to profit on the SHORT side.
h2 TO GO SHORT/h2
CCOC – Consecutive Closes Odds Calculator (TIME EXTENSION ANALYSIS)
The TIME EXTENSION ANALYSIS model below shows how many consecutive higher closes (bars) we had on each time period and puts this information in a statistical context.
The DAILY time period gauge shows “4” days up. 89.60% of the events recorded in history are scenarios where the market closed up 4 days and then the next day was closing down. The market is about to pullback DAILY.
The WEEKLY time period gauge shows “2” weeks up (updated at the end of last week). 68.90% of the events recorded in history are scenarios where the market closed up 2 weeks and then the next week was closing down. The odds for a pullback this week are starting to look good.
The MONTHLY gauge shows “0” months up (updated at the end of last month).
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RL – Retracement Levels Odds Comparator (PRICE EXTENSION ANALYSIS)
The PRICE EXTENSION ANALYSIS model below shows how far a price retracement (uptrend) can go on each time period, based on the statistical analysis of all the historical retracement patterns that share similarities with the current retracement pattern.
The DAILY time period offers good resistance at the 2089.75 level (highlighted below): 75.09% of the events recorded in history are scenarios where the market does not go higher than this level during this type of retracement pattern. This level was reached and briefly breached last Friday, however it indicates where we are now: the market is seriously overbought at this level. This confirms that a DAILY pullback is imminent.
The WEEKLY time period offers very strong resistance at the 2068.50/2118 levels (highlighted below, best match for the DAILY level): 78.79%-93.94% of the events recorded in history are scenarios where the market does not go higher than this level during this type of retracement pattern. These strong WEEKLY odds will certainly give way to a reversal, so we confirm here as well that the market is about to have a WEEKLY pullback (possibly mildly) before it can go really higher.
The MONTHLY time period offers good resistance at the 2090.50 level (highlighted below, best match for the DAILY/WEEKLY levels): 53.13% of the events recorded in history are scenarios where the market does not go higher than this level during this type of retracement pattern. The market has reached and briefly breached this level last Friday, the odds here are not yet as good as they should be to guarantee a MONTHLY pullback, we are in a coin flip scenario, 50-50 up or down, we need to reach 2255 before we can say: OVERBOUGHT. This means that if you are a long-term investor, you can hold: once the upcoming WEEKLY pullback is over, the market can actually go much higher.
The big gauge on the right hand side of the table below shows that 69.00% of the DAILY+WEEKLY+MONTHLY (combined) cases recorded in history, are scenarios where the market does not go higher than these levels during this type of retracement pattern. Although the MONTHLY is not really overbought, this is quite a good setup to go SHORT, a WEEKLY reversal (one week down) is highly probable from here and that could translate in very good profits.
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