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Sp500short

Is tomorrow the day we predicted last year to be the market top?FOR THE FULL ANALYTICAL RIGOR THAT IS WORTH READING START HERE (otherwise skip to the section titled if you only care about the future “START HERE IF YOU SKIPPED THE TOP”) It has been a long year since we got the program working, calculating probabilities, and identifying where we likely were in time. Sometime early 2022, I realized what would happen if we took all S&P 500 price data, applied structured Elliott Wave Theory to it, identified the relationships between all macro and micro wave structures, and determined our current location in time to forecast future movement. By early July 2022, I realized if we completed SubMillennial wave 1--Grand Supercycle 5--Supercycle 1 in January 2022, then I could take prior wave relationships to forecast the 3 waves inside of Supercycle 2 based on the data from Supercycle wave 1. This forecast can be found here: It forecasted the bottom of the first wave down (Cycle wave A) to end around October 18, 2022, the top of the second wave up (Cycle wave B) to end around mid-July 2023, and the final bottom (Cycle wave C and Supercycle wave 2) likely in the first quarter of 2025. I would update my program every time I believed waves completed and re-calculate these points and the movement over the next few weeks to months. Feel free to head to my profile to view all ideas. A few reversal points did occur earlier or later than forecasted at higher and lower levels, but I learned the original forecasts were normally the most accurate. One of the key places I rushed a forecast was as we got closer to October 18th I had the bottom occurring later in the October or closer to November. This August 20, 2022 analysis had the levels and days for the bottom spot on, but I temporarily went a different way. The relational data was proving more and more accurate. The actual bottom in October was on the 13th instead of the first forecast of the 18th. I finally accepted the bottom by December 5, 2022, once I went back to review my older analysis. From there the program continued to call waves out well, with Primary wave A happening lower than expected but on the date as seen in the December 5th analysis above. Primary wave B was long and the internal wave C never broke below the initial wave A which was confusing, however Primary wave B was forecasted on December 6th to occur in the middle of March and sure enough it occurred on March 13, 2023 as seen below: But after this original forecasting from the program I continued to attempt to find Primary B in many places after a traditional ABC wave down which never came. Finally by March 2, I reviewed my original analysis and updated Primary wave B to end around March 14 and it ended March 13 as seen here: Upon completion of Primary wave B, I forecasted the market top and end of Primary wave C. The forecasted date was June 16th no higher than 4403.88 as seen here: After the completion of Minor wave 2 inside of Intermediate wave 1, I updated the market top to June 20th, based on Intermediate wave 1 likely lasting longer than initially expected when Minor wave 1 ran long as seen here: At this time I loosely placed Intermediate waves 1-5 in their projected locations as well. The market top was re-adjusted again back to June 16th on April 9th as seen here: Intermediate wave 2 was forecasted on April 17th as was spot on on April 26th here: Intermediate wave 3 was much longer than expected after gaining 33% of the expected gain in the first day followed by being slow and trading sideways at times too which is very abnormal of a wave 3. By May 7, I had backed the market top back up to July and then debt ceiling chaos broke out. With the debt ceiling resolved Intermediate wave 3 was still slowly moving. Then my program threw me for the biggest curveball I could not believe and thought it was an error. Intermediate wave 3 had finally wrapped up. All preceding waves to that point had been 12-25 days long. In my wisdom, Intermediate wave 4 would likely be in the middle of that range. The program urged it would only be 2 days AND only retrace 15.06% of Intermediate wave 3’s movement. I was skeptical but went with it and said it could last 4 days. Intermediate wave 4 lasted only 3 days and after I adjusted the Fibonacci tool retracement levels, 15.06% said the bottom would be at 4261.479 as seen here: The actual bottom was 4261.07. Finally on June 8, 2023 Ziggy spits out the plan for Intermediate wave 5 as seen here: START HERE IF YOU SKIPPED THE TOP The models are pointing for Intermediate wave 5 to last between 3-5 days with the likely top around 4393.93. I chose 4 days and around but not likely over 4400. After all the projections and models and recalculations over the past year we are here. Still around 4400 and back to mid-June. AND it’s Fed day with some high expectations of no hikes and word of a future cut in 2023. Elation should follow if this happens, but what else is going on. Inflation since 2021 is now around 16% and has increased every month since mid-2021. Wages for everyone have not increased even close to 16%. Mortgages are around 7%, not many people rushing to trade their 2% mortgage for a 7% mortgage now. Students with loan need to start paying the piper as they begin to accrue new interest again. Those that did not wisely save their payments and collect interest on that money over the past two years are about to give up some luxuries which means retailers and restaurants are will soon see declining sales. Chaos bound to rattle the 2024 Presidential tickets is just gaining steam with outcomes unknown. Meanwhile the VIX was at its lowest level since pre-COVID last Friday signaling complacency in an economy that continues to lay off workers. All the numbers are not moving synchronously in the proper directions which likely precedes market corrections. In this case, based on all the data, this is likely the major bear market I identified last year. I can always be wrong, or we can go up a little higher before correcting. But I have learned my lesson to trust the original analysis and that says the top is in. It would be smart to not repeat 2008 and watch your retirement accounts and 401Ks plummet 50% when you have the opportunity to do something about it today. Maybe move to cash or something with less exposure to major companies and indices or the G Fund for you government employees. You may not make much money and can always switch it up if the program is wrong, or you can save your retirement and sit out of the market for 14-18 months until we find the bottom. While others begin recovering and realize they need to pick up a second job or leave retirement for work again (Tom Brady might not mind) to survive, you could then ride the next major bull market up. Follow me if you would like to see where the models take us moving forward.
SP:SPXShort
by StockSignaler
3
$DJT: Dow Jones Transportation Average Not Confirming The RunIf you wanted to know whether or not the market was on a bull run or not, all you had to do was look at the Dow Jones Transportation Average or even AMEX:RSP (which definitely does not fit the bull market, showing that overall the S&P 500 has barely broken 15% gain since October). More important though is the transportation average breaking off from the rally ahead of the rest of the market. When transportation is leading us lower this is not a good sign for the economy. Other economic indicators support this thesis. For example, cardboard box demand is the lowest it's been since 2008. Showing signs of a decline in goods demand. For more insights on trading and investing check out the Equity Channel Podcast on Apple, Spotify and Amazon.
DJ:DJTShort
by D1Finance
QQQ: I might be wrong (Inverted Chart)I have been a staunch bear since about March. Since the lows expected a nice bounce but that we would resume the downtrend at some point. Nothing has convinced me that this market would not do anything besides have another period of pullbacks, until I inverted the QQQ today. From this perspective, I cannot help but see the very real possibility of a double top at the very least. At that point though, there is no reason we couldn't keep going and make new highs. The macro economic conditions are not ideal in the slightest but this might be the kind of bull that is largely absent retail and will say that way until we actually start to top. A bull, minus retail, is what this looks like. You are not having investors capitulate easily at all. Buyers have been positioned large and they plan on staying there for a while. Very hard to say. This is by far the hardest market to judge, that I personally have participated in. I am thinking about taking some long positions in certain companies, maybe even the Qs but I will be doing so cautiously.
NASDAQ:QQQLong
by Goontata84
1
Wyckoff Supply and DemandThe stock market crash of 1929, also known as the Great Crash, was a disastrous event for the American economy and marked the beginning of the Great Depression. It is highly unlikely that a similar situation will repeat itself exactly, as the lessons learned from those events have led to the implementation of policies and measures aimed at preventing such a major crisis. However, there are certain signs and contemporary economic trends that may raise concerns. For example, the high levels of public and private debt globally pose a significant challenge. Continued debt growth can lead to financial instability and restrict long-term economic growth potential. Furthermore, the performance of financial and stock markets can provide clues about the state of the global economy. During periods of strong economic growth, overheating can occur, which may lead to speculative bubbles. If these bubbles burst, significant market corrections can occur, impacting the real economy. Additionally, factors such as geopolitical instability, trade tensions, and abrupt fluctuations in commodity and raw material prices can influence the global economy and generate volatility in financial markets. To determine more precisely whether the current situation exhibits similarities to the stock market crash of 1929, a detailed analysis of multiple economic, financial, and political aspects at a global level is required. Moreover, experts and economists should further evaluate these aspects to make more accurate predictions.
FX:SPX500Short
by HoratiuBogdan
My personal analysis is logical to SPXThe price is upward, which indicates that the trend is upward, so we will search for buying, and I have placed the buying or selling points, in the event that the price breaks the level that was talked about, in order to know more about what the price might do, and I analyzed it in a technical and rational way . In the case of buying, we will wait for our order block to ease and fill the gaps, as well as the acquisition of liquidity, but in the case of selling, we will wait for the bottom to be broken, to confirm that the new trend has been formed and that we will become in a downward trend, and what confirms this to us is that the blood has come with the bottom that was created by If the price is broken, we will look to sell, and there is another support below it, and that support seems to be strong, so we will take the first target there, and we will wait for the price and we will wait for the price’s reaction to it. If we notice that it wants to change the direction, we will close all our deals. The long term, because if that level is broken, we will have a strong downside trend, because we will break strong support, which simply turns into resistance.
SP:SPX
by ESCANOR-ICT
SPY: FLUSH OR RALLY / MARKET BREADTH / MARKET MAKERS TIMINGDescription: In the chart above I have provided a semi-macro analysis of SPY that compares ongoing market rally and past rallies within the range of 420 & 360 Points. Points: 1. Price Action is fast approaching 420 Resistance that has been indicative of a turn around for past 4 rallies that failed to break the 420 LEVEL. 2. First 2 rallies under the 420 Level showed signs of congruence when it came to market breadth and price action. 3. Last 3 rallies including current one has shown divergence with market breadth along with a distinct pattern of consolidation that is followed by a sudden drop in price action. 4. It is important for price action to have another leg even if current uptrend is continued. First Price Target: 404.64 Bouncing Support Second Price Target: 400 Critical Support Market Breadth: 1. Showing strong signs of divergence with average price action continuing to rise. The Tech Sector is mainly responsible for the upholding of this rally with giants like AAPLE, NVIDIA, AMD, AMAZON, META, & GOOGLE fighting against bearish momentum. 2. For the majority of US INDICES Tech companies like AAPLE, NVIDIA, AMD, AMAZON, META, & GOOGLE represent a large majority of the holdings within many US INDICES. So it is no coincidence for why market breadth may appear weak when only a couple holdings are contributing to rallies meanwhile a large majority of the holdings are in the red. 3. Market Breadth Levels of 4200 have been indicative of volatile declines in price action in the past with an average incoming 10 POINT DECLINE over a day or two. FULL CHART LINK: www.tradingview.com AMEX:SPY
AMEX:SPYShort
by DGSTBROKERACC
S&p500 Golden Swing Opportunity We are in a very crucial zone in terms of time and price on Sp500 right now and people who make the right decisions will make money. But to make the right decisions you must look at the data and filter out all the noise and be patient. I have presented my case for incoming selloff a few times before and now it's all coming together. I have provided the links to my previous posts below, please go over them to get the full picture. I am building shorts in 4185 to 4230 Area and there are several reasons for that. Technical Reasons: 1. On the chart I have a large parallel channel. Currently the price is hovering near the top edge of the channel. This itself is a reason to look for shorts here. 2. Chart also has an indicator which shows 9 count sell signals as per TD sequential method. Notice what happened last time when the price was near the top of the channel. We got two consecutive nine count sell signals and as soon as price hit the top of the channel multi month sell off began. We have something remarkably similar going on right now. 3. Last time when we were near the top of the channel, we had bear divs on RSI and Money flow, we have them now as well. 4. We have harmonics ratios providing heavy resistance from 4214 region and upwards. 5. Another thing to notice is 4300 is 61.8 retracement level of the move from the top, That's another reason to build shorts here, one should not wait for 4300 to be hit to build short, as its absolute top and may not get hit due to other factors I mentioned above. If we begin the selloff in the coming weeks, we are looking at a possible 30% drop from current levels, in the next 3 to 4 months. I have provided these targets and measures based on past price action from top of the channel to the bottom, this of course is not going to be 100% accurate can change based on future market moving events. We also have below confluences for targets motioned in the chart above: June 14th We have Fed event, and SPX has been moving in the highlighted disjoint channel for a while so if we intersect 14th June with the channel we get the max upside and downside targets. Fundamental reasons: 1. The Fed's actions to raise interest rates are likely to slow the economy, which will lead to a recession. The Fed has said repeatedly they will continue to raise rates to bring down inflation to the target goal of 2% which is not yet achieved so no rate pauses as institutions and new media like people to believe. 2. Debt Ceiling battle: With no resolution in sight, the uncertainties surrounding this event could be the trigger to start the selloff although I am not discounting the possibility of a manipulative rally to 4300 which is a fantastic opportunity to build shorts. 2.1 If there is no resolution on this topic and US defaults everyone knows what will happen , so, until that is resolved all the contrarian traders should be extremely cautious. If you like my content, then please boost, and share this post. I have over 6 years of trading and investing experience and have learned a lot in this time. I like to share what I have learned. If you would like to learn from my experience then follow me on trading view to get notified on my trade, market projections and several upcoming technical analysis and in-depth tutorials on technical Indicators. You can also leave a comment and let me know if you want me to look at any specific asset or want to learn about any specific topic in the world of Technical Analysis. I Will do my best to create a post for it. Keep learning and Happy trading All.
OANDA:SPX500USDShort
by zakoraio
2
SPX analysis and predictionIn this post I will be making some projections and will also try to walk through the thought process to make those projections. Note: This is not Finacial Advice these projections are just some calculations based on the data we have currently, if the data changes, projections are likely to not play out. I am sure many of you might have already seen this rising wedge pattern on the chart on Weekly timeframe suggesting a drop in price over the coming weeks. But the thing with patterns is that they are subjective, and based on what your bias is you may see only certain types of patterns on the chart, that's why it important to remain neutral and look at the data objectively from all perspectives. Here are some other patterns which we can draw on the SPX. 1. Ascending Triangle about to break to the upside Symmetric Triangle is a pattern of indecision which is About to break to the upside So, we have three different patterns on the chart, one bullish, one bearish and one indecisive. We need a way to break the tie between patterns to find out which one has the higher probability of winning. Let's take help from indicators. I have added RSI on the weekly chart, here the picture starts to become slightly clear, we have RSI rising buy in a wedge which is a bearish structure and likely to breakdown over the coming weeks. Let's Zoom in a bit get a clearer picture, here is the chart on Daily TF I have added all the bearish divergences I see. Based on above analysis, the picture is becoming clearer, we have one bullish, one bearish pattern on the chart, but we also have one bearish pattern on RSI and several bearish divergences which makes probabilities in the favor of bearish pattern playing out higher. Now if we look at all the patterns, except the bearish pattern all other patterns have run out of room and are about to break out to the bullish side, which can create turbulences in the execution of the bearish patterns over coming days and weeks, but the divergences are in front of us ,there less and less people willing to buy at these levels , so if we start to move up a bit its likely to fall down fast. Now that we have established that the probability is higher for bearish side to play out let's make some measurements for targets. I have trend-based fib time to help us with times when the Pivots are likely to form, based on the theory pivots are likely to form, including and between .382 and .618 projections of the trend. I have also added two measurements of the Falling wedges we have one in green and another one in blue, the green measurement of green wedge falls at a remarkably interesting time (19th of June) and 5 days before that we have FOMC events which are known to create pivots. I have also added a trend line from the top which caught the previous bottom and the green measured move falls perfectly on that line. Now if the line holds, I am expecting only a temporary relief, and continuation downwards towards the second measured move due to the wedge in color blue. I have added two harmonic Structure which appear on both weekly and Daily Timeframes for the longer term measured move. PRZ of these structures falls precisely close to the measured move and the red trendline intersections. Now that we have long term movement captured, let's look at short term movements. We are forming a diamond pattern on Daily TF, this pattern has 50/50 change to break to either side, but if this pattern is formed after a move up, the probability is slightly higher for a break to the downside. I have added measured moves and tried to match it with the larger pattern (disjoint channel), this move intersection with time is also an interesting one as it falls on the weekend of 9th June and on the first day of next week ( 13th June ) we have CPI release. If you like my content, then please boost and share this post. I have over 6 years of trading and investing experience and have learned a lot in this time. I like to share what I have learned. If you would like to learn from my experience then follow me on trading view to get notified on my trade, market projections and several upcoming technical analysis and in-depth tutorials on technical Indicators. You can also leave a comment and let me know if you want me to look at any specific asset or want to learn about any specific topic in the world of Technical Analysis. I Will do my best to create a post for it. Keep learning and Happy trading All.
OANDA:SPX500USD
by zakoraio
2
SPX Swing Trade, History repeating (CPI incoming)The chart is self-explanatory, I have highlighted in the chart where we saw remarkably similar price action in the past. I have identified two different structures in the chart, a parallel channel, and a disjoint channel. We are currently trading in the disjoint channel. A disjoint channel has expanding edges which have same slopes locked in opposite directions. We entered the Current Disjoint channel from a parallel channel trending upwards which is exactly what happened in the past, the only difference is size of these channels, in past we had larger Parallel and disjoint channel compared to what we have now. The small size of channels this time indicates reduced volatility overall, which if it happens at the end of an uptrend, means we are topping out. Let's make some predictions based on this. If we look at the current price action, it is forming a bull flag (highlighted in the chart) , I have also highlighted the measured move of the flag. If the flag plays out its measured move intersects directly into the top of the disjoint channel as well as the August high. Which I believe should be the top or close to it. In case bull flag fails , and we first drop a bit then we can look at that the blue line, it is placed for 10th May CPI Day and if we move up on that day, we are still intersecting close to the August High and top of the disjoint channel. Apart from the above structures we also have a harmonic structure with its PRZ falling right onto Aug high. If you like my content then please boost and share this post. I have over 6 years of trading and investing experience and have learned a lot in this time. I like to share what I have learned. If you would like to learn from my experience then follow me on trading view to get notified on my trade, market projections and several upcoming technical analysis and in-depth tutorials on technical Indicators. You can also leave a comment and let me know if you want me to look at any specific asset or want to learn about any specific topic in the world of Technical Analysis. I Will do my best to create a post for it. Keep learning and Happy trading All.
OANDA:SPX500USDShort
by zakoraio
2
SPX Short Day TradeLooking at the short execution of the bearish harmonic PRZ, confluent with the .786 and 0.886 retracement of the whole move up It's a day trade. It can be a swing trade as well based one's risk capacity for Swing Trade SL is much higher at 4280. Alternate View of the chart with all the levels of interest. I have over 6 years of trading and investing experience and have learned a lot in this time. I like to share what I have learned and if you like my content and would like to learn from my experience hit like and follow me for getting notified on my trade, market projections and several upcoming tutorials on technical analysis and several technical Indicators. You can also leave a comment and let me know if you want me to analyze any specific asset or want to learn about any specific topic in the world of Technical Analysis. I Will do my best to create a post for it. Keep learning and Happy trading All.
OANDA:SPX500USDShort
by zakoraio
Hit the target top, now for the bottomIf Intermediate wave 1 is finally done, it was a few days late, but on target. Next forecast is for Intermediate wave 2 which should see the anticipated market decline over the next 5-12 days. This means the bottom should occur prior to May 2. As of now, Intermediate wave 1 was 23 days long. Waves ending in 2BC2 have been 20-50% the length of their first wave’s length. The projected retracement percentages have not change, but the values have slightly as the initial estimates were based on Intermediate wave 1 topping at 4160. The most specific datasets correlate to the retracement levels in light blue. The 33.44% value represents the first quartile of historical movement for waves ending in 2BC2. The median is 60.60% and the third quartile is 77.87%. The next specific values are in yellow and the are tied to historical waves ending in BC2. The third quartile is not displayed in yellow because it is also the 77.87% from the first dataset. The length of wave 2 based on this slightly larger dataset has it lasting 5-12 days again, with the strongest model agreement on 7 days. This could put the bottom around April 25. The final set of values are based on a larger and broader dataset based on the behavior of waves ending in C2. These values are in white and the median value is omitted because it is close to the yellow value of 67.86%. The strongest model agreement suggests wave 2 could last 23 days (18 models) followed by 8 days (14 models), 12 days (12 models), and 7 days (6 models). Declines could be related to earnings and speculation on the Fed which will provide the next rate hike determination and hint toward the future during the first week in May. Based on all the data, I am placing the bottom around 3922-3950. This will depend if the index starts moving down tomorrow or if another new high is reached. After this next bottom we should jump into the final strong rally of this uptrend possibly gaining 350-450 points over the course of 4 weeks. A perfect catalyst for this would be the Fed doing what is expected and hinting at a pause on rate hikes. While I do not agree it is a smart thing to do, it will be one of the many catalysts for the massive declines set to begin around mid-late June. Let’s play the drop, the big gain, and then its prevent defense time (after wave 4 down and wave 5 up).
SP:SPXShort
by StockSignaler
5 Things to Watch in the Next 2 WeeksCME: E-Mini S&P 500 Put Options ( CME_MINI:ES1! ) Important data releases in the coming weeks would shed light on the health of the US economy and could have significant impacts on global financial markets. We will focus on a number of critical datasets, mainly the following, in the upcoming weeks: • Federal tax revenue (Tax filing deadline: April 18) • Existing home sales (April 20) • Personal income and outlay (April 28) • Fed rate hike, or the lack of it (May 3) • Gasoline price trend (before peak summer driving season) Federal Tax Revenue According to the US Treasury Department, the sources of tax revenue for US federal government in 2021 were: • Individual taxes: 42.1% • Social insurance taxes: 23.8% • Consumption taxes: 16.6% • Property taxes: 11.4% • Corporate taxes: 6.0% The annual tax filing deadline for individual and corporation is April 18th. In practice, income tax, social security and Medicare are withheld from each paycheck for employees. Corporations pay estimated tax on a monthly basis. Property taxes are assessed annually. Sales tax is paid whenever you buy products or services. Tax filing is a process where taxpayers calculate tax liability and claim tax credit. If you’ve paid too much, ask for a refund. If you didn’t pay enough, send Uncle Sam a check. We could track government tax revenue and expenditure using the Monthly Treasury Statement (MTS) data published by the Treasury Department. Here are what I found: • In the first three months of 2023, gross tax revenue is $2.268 trillion, while tax refund amounts to $219.8 billion; The resulting net tax receipts are $2.048 trillion; • Comparing to Q1 2022, gross tax revenue is down 0.2%, but tax refunds are up big time by 45.8%. Net tax receipts are down 3.5% year-over-year; • Q1 individual income taxes $1.22 trillion, tax refunds $192.4 billion and net tax receipts $1.03 trillion; Y/Y changes are -1.9%, +59% and -8.5%, respectively; • Q1 corporate income taxes (in billions) $159.0, refunds $19.0, and net tax receipts $140.0; Y/Y changes are +5.1%, -20.7% and +10.0%, respectively; Individual taxes are the most important revenue source for the United States. A declining tax receipt would push the federal budget deeper in the red. But with unemployment at record low and wages on the rise, why is income tax revenue going down? In 2020, the top 1% of income earners earned 22% of all income and paid 42% of all federal income taxes – more than the bottom 90% combined (37%). For the top earners, most of their income taxes come from capital gain, not from wages. In 2021, Dow Jones Industrial Average gained 18.7% while the S&P 500 and Nasdaq 100 had annual returns of approximately 27%. I examine the MTS data for April 2022, which covered the tax filing period for year 2021. Net income tax receipt was $1.72 trillion, up 68.5% y/y. This shows positive correlation between stock market gains and growth in individual income tax revenue. In 2022, the Dow declined 8.8%, while S&P and Nasdaq were down 19.4% and 33.0%, respectively. The individual income tax in Q1 2023 was down 1.9%, but tax refund was up 59%. This again shows positive correlation – stock market losses and decline in income tax revenue. March MTS data strongly indicates that investors are writing off big capital losses from last year. When the tax season is over, I expect to see bigger tax refund and widening net receipt shortfall in the April MTS data vs same period in 2022. Implications: Urgency for Debt Ceiling Negotiation In January, in a letter addressed to House Speaker Kevin McCarthy, Treasury Secretary Janet Yellen warned the US has once again reached its debt limit. The Treasury Department started taking extraordinary measures to keep paying the federal government’s bills, but it would suspend new investments until June 5, 2023. Yellen warned both moves are subject to “considerable uncertainty” if Congress does not pass the bill to increase the debt ceiling. US financials have deteriorated since. According to USDebtClock.org: • US National Debt: $31.69 trillion • US Federal Spending: $6.03 trillion • US Federal Tax Revenue: $4.61 trillion • US Federal Budget Deficit: $1.42 trillion We now expect tax revenue to decline by at least tens of billions of dollars, while spendings on Defense, Medicare, Social Security, and Debt Interest are all going up. As a result, federal budget deficit could be underestimated by well over one hundred billion dollars. Would the federal government have enough money to keep the light on until early June? I suspect the insolvency time bomb is ticking closer and closer. Short-term Trading Strategies Although we had two rate hikes and a banking crisis in the first 100 days of 2023, major stock market indexes are all in the positive territory. The Dow gained 2.2%, S&P 500 rebounded 7.8%, and the Nasdaq pushed up 19.6% YTD. While investors managed to brush off bad news so far, balance sheet deterioration in government, corporation and household would eventually catch up. I am seeing a 5-10% correction in the S&P 500, if some of the following conditions materialize: • Federal tax revenue comes in significantly lower than expected. April MTS report would be released around May 12th; • May 3rd FOMC: If the Fed raises rates and does not signal an end of the tightening cycle, both corporate earnings and household spending would suffer; • US banks could tighten lending standards in the wake of banking crisis. This would add to higher borrowing cost on top of the rising interest rates; • Debt ceiling negotiation: if the White House and the Congress could not reach a deal quickly, we may be heading for the technical default of US government debt. Right now, they are not even sitting at the negotiating table. Options on CME E-Mini S&P 500 may be a way to express a bearish view. The E-mini S&P 500 Index Futures June contract (ESM3) is quoted 4171.75 last Friday. With a notional value of HKEX:50 x S&P 500 Index point, each contract is worth $208,587.5. Put option with a 4070 strike, which is about 100 points below market value, is quoted 76.25. To acquire one option requires an upfront premium of HKEX:3 ,812.50 (=76.25 X HKEX:50 ). Put option carries a nonlinear payoff diagram. Your loss is limited to the premium you paid, but potential gain is unlimited. Hypothetically, if the S&P futures price falls to 3900, put option will be 170 points in the money (=4070-3900). The gain on the account would be HKEX:8 ,500 for each contract. If our view proves to be incorrect and the S&P goes up instead, put premium could decline in value, resulting in a loss. The worst-case scenario is that options would expire worthless. Happy Trading. (To be continued) Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:ES1!Short
by JimHuangChicago
19