** There was an error in the original post as denoted below **
Friday saw another downtrending day on the cash S&P500 index. On a trading basis …. Note that; at least for one day, we held identified support in the 1276.5 to 1284.5 cluster zone by closing above the lower end of the target. As such we must continue to be on guard for a price reversal.
In my last post I mentioned “tightened” stops on any short position. This means different things to different people. One way to identify stop placement (and there are hundreds I am sure) is via the Reaction – Trend System invented by Welles Wilder. As an example, the stop going into Friday’s session would have been 1305.24 and was not hit. For Monday the stop would be lowered to 1287.89. This would not be a stop and reverse. I would only take a long position only taken on a break of 1320.15 (NOT 1351.11 as originally posted) (this is where today’s resistance line falls). Any long would have an immediate trailing stop at the lower of the last three lows (including Monday’s low).
On a forecasting basis …. I am still sticking to the idea that the March low will hold in the S&P500. In my timing work this implies that a significant rally is at hand – with a minimum target of 1440 (the May 9 high) - but first we need to see a reversal on the daily chart. One step at a time.
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