Graph of the day: trade in the S&P 500 & # 039; s short rally before the sale continues

It is likely that there will be a rapid revival before the decline continues, as US data shows signs of participating in the global slowdown.

for the S&P today opened above yesterday's closing, prolonging a rebound. This is in contrast to the heavy losses in Asia and the failed rally in European equities.

Still, traders had little to hang their hats yesterday. disappointed and dropped to a three-month low and the US contracted. Now the focus is shifting to whether this recession virus has spread to the wider market.

The cracks in the US data came as a kind of poetic justice after the US proceeded to impose a reported $ 75 billion in rates on the EU after the WTO ruled that European aircraft subsidies were illegal and Airbus (PA 🙂 an unfair advantage over America & # 39; s Boeing (NYSE :).

These duties affecting Europe – along with the continuing trade war with China – make a compelling reason for recession after the longest expansion ever; it also suggests that it is time for a fall followed by a winter. This is already indicated by falling revenues.

The maps also suggest a short rally, followed by a return to the falling trend.

The two-day dive of the S&P went into hiding, but closed above the bottom of a falling channel since May, indicating that the question remains even after yesterday's pessimistic vote.

Although this support increases the chances of a return to a small H&S top / island reversal, we see the potential dip purchase as short-lived because the H&S top, although small, marks the second failure to stay above the medium- term uptrend line sold out since Christmas Eve (thick uptrend line).

After falling below 50 and 100 DMA, a fall below 200 DMA – which was in line with the August lows – would indicate a top.

Trading Strategies

Conservative traders would wait for a fall below 2,728.81, June 3 low – which would prove to be a resistance level when attempting a follow-up rally – before they entered into a short position.

Moderate traders would wait for a return movement that would show the downward trend when it finds resistance at the H&S summit and falls below 200 DMA.

Aggressive traders risk a contraire, long position, counting on the expected return movement to the neck of the H&S summit.

Trade sample

Listing: 2,890
Stop loss: 2,870 – lower than yesterday
Risk: 20 points
Target: 2,950 – under the H&S neck
Reward: 60 points
Risk: reward ratio: 1: 3

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