We opened 2/3rd of a long position on Friday at 1308.02 and we introduced an order at 1301 for the last third. Why?
We are pretty comfortable that the market should retest de 1335 - 1360 area in coming days (or weeks), put we are not convinced that the pullback is already over.
So, we will increase our position if the market retest the 1290 - 1305 area.
Looking at our indicators, we can notice that they are (all) in positive territory:
- The Sigma Trend Index moved from '-1' to '2', telling us the downtrend is over (at least for the short term) and that we should have more than a simple bounce back in this move.
- The Swing indicator and the Power Level (PL) are at '3' (neutral), but it is not a problem because we got a swing indicator at '5'(strong buy) on the 6th of June.
Looking at our Breadth Index (red line), we can see that it is also in positive territory:
All our indicators give us comfort in our short term bullish scenario.
Nevertheless, we have 2 different scenario for the "ultra short term" (1 or 2 days):
After 5 waves to the downside, the market is in a countertrend move in 'abc'. We believe we are within the 'a' wave of this countertrend rally (subdivided in 5 subwaves).
We believe that the 3 first subwaves of 'a' are finished, but we are not sure than the fourth one is also finished.
Here are our 2 short term scenarios:
If we move to 1301 (scenario 2), we will increase our exposure to the SPX (with a stop loss at 1285).
If we move on a straight line to 1335 (scenario 1), we will cut our long, waiting for a pullback in order to re-enter the market with a target at 1360.
For those of you who are interested in our intraday move, you can visit our internet site: we post all our operations in real time.
Current position: 2/3 long at 1308.02
Have a nice day.