S&P500

[Kaitsu]

The Far East stock markets were weak at the start of this weak due to US-China trade concerns and the situation in Hong Kong. But the SP500 gained primarily on comments. After the meetings at the end of last week the U.S. Trade Representative’s office described them as “productive”, whilst the China’s Commerce Ministry described the talks as “constructive”.

The SP500 suddenly closed weak last Friday. I am not sure about this but I think it was due to Chinese officials unexpectedly cancelling a planned visit to U.S. farms. This drop was reversed this morning.

The SP500 retains its positive tone but seems capped by the record highs achieved at the end of July this year. Whilst the outlook for the US economy remains positive there is still the feeling that the US-China will not be resolved any time soon and that is negative for global trade as a whole. And the US economy is not entirely isolated from the global situation.

[Kaitsu]

Another quiet day here, too. We saw a minor early push down towards last week's lows but the rest of the day was a gentle climb back with a close well above the day's opening levels.

The current underlying strength in this market continued in the Far East with trading back above the 3000 level.

There is optimism concerning the upcoming high-level US-China trade talks in a few weeks time as well as the usual pre-talks rhetoric. It would seem that this optimism may continue this week unless any unexpected negative events get in the way.

[Kaitsu]

Friday saw a strong response in SP500 following the data release. The US economy is still moving strongly and with high employment, but not without some grey clouds appearing on the horizon in the form of weak data concerning manufacturing.

The Far East  markets did not continue the up move and slipped back a bit.

I guess the two main areas at present are the Fed speeches and FOMC minutes this week and the upcoming US-China trade talks.

So in the near term I think we will hold a positive feel while we can stay above the 2900-2925 but I doubt we will move above 2950 without fresh input. This input could well come in the form of Jerome Powell's speech later today and any hints of further easings and rate cuts.

[Caesar]

I think you're right about the S&P positive outlook, especially if Trump can come up with another booster for the economy like he did last year.

[Kaitsu]

So in the near term I think we will hold a positive feel while we can stay above the 2900-2925 but I doubt we will move above 2950 without fresh input.

The phrase"near term" used to mean maybe the next few days, but it seems nowadays it only means "good for the next few hours....."

Yesterday did turn out to be an up-day, albeit a rather weak one, but ran out of steam again at the 200-period SMA on the 4-hour chart (overlaid on the 1-hour chart attached), which is also more or less the level where we closed on Friday, and we couldn't close above that 2950 level.

But yesterday also brought forth some new Trump sanctions moves against China (this time in the name of human rights issues), as well as some negative sentiments about the likely outcome of the upcoming US-China trade talks starting this week. In my opinion, these are typical Trump tactics prior to negotiations by demonstrating what kind of negative actions the opponents could face if they do not compromise and forcing them to give up ground just to get back to the original starting point.

Either way, the failure to move higher on the week combined with these actions/comments were sufficient to turn today's likely direction downwards, and that is what has taken place so far.

I actually tried to write about this view this morning but the site was in maintenance mode then. I also wrote this post earlier tonight, but lost the entire post when the site again went down when before I could publish it!  ).

What these market moves really show is the current futility of commenting on markets at all with a time-frame longer than the next few hours.

Fortunately, the SP500 is a great market for short-term, intraday trading, such as on a 15-min time-frame, if one is content to sit and monitor one's positions. 100-200 points is easily attainable (today produced 225 pips) But that is hardly something one can post about on a forum in real time.

[Kim]

Do you trade this often?

[Kaitsu]

Do you trade this often?

Its my main trading instrument so I watch it constantly. Sometimes swing trading, but nowadays more just in and out while it is so unpredictable and jumpy.

I use a very simple approach, similar in concept to the 3 ducks in that I mainly watch the 4H, 1H and 15min TFs, and all with the same basic set-up.

I also keep a watch on the candle formations on the daily chart as background. If the 4h/1h/15min fits with the daily outlook then I look to stay in it longer, sometimes with a manual trailing stop, otherwise the 1H is my main TF with the 15min giving entry/exit signals.

Maybe sounds more complicated that it is.

But it is not a mechanical system. I treat it more like a satnav that is giving me directions, but I decide when to actually act on it!

[Kaitsu]

. 100-200 points is easily attainable (today produced 225 pips)

And another 135 points to finish the day off the 15 min chart.

[Caesar]

Nice way to end the day 

[Kaitsu]

Nice way to end the day 

Yes it was, but some of the satisfaction is quashed by the suspicion it was probably more by luck than judgement! 

[Caesar]

That’s a good sign, being self aware. Much better than assuming every winning trade was down to your ability and every losing trade down to misfortune.

[Kaitsu]

That’s a good sign, being self aware. Much better than assuming every winning trade was down to your ability and every losing trade down to misfortune.

Yes, we have to accept that there is only one captain on each ship and it is up us, the trader, to make the decisions, control the action, and accept responsibility for all the outcomes.

We need to realise that we are, at best, only dealing with probabilities in all our trades And that means there will be gains and losses, and that this is actually ok.

All we need do to be profitable is manage the outcome of these probabilities with sensible risk/position size/equity management. Quit when we're wrong, run with it when we are right.
 

[Kaitsu]

A long term observation on the SP during 2019 (which is probably good for about 5 minutes!)

One broadly watched indicator is the 200-period moving average and especially on the longer term time-frames.

The daily SP500 has been riding this line all year and is again approaching it from above. This is worth keeping an eye on.

If it were to break this convincingly then some might see a big head and shoulders formation here.

[Kaitsu]

Continuing on from the above look at the daily 200- period MA, This possible head and shoulders is further highlighted if we overlay this daily 200 SMA onto a 4-hour chart with a 4-hour 200-period SMA.

Both these lines are often respected as S/R levels and price crossovers are often followed by significant moves.

But this year has seen breaks on the upside through the 4-hour line but only to later fall back inside these two lines.

Last Friday looked like we might see another such break above the 4-hour 200 SMA but it failed on Monday and turned into a rejection yesterday. Now it is a question which of these two, converging lines will break next?

[Kaitsu]

Boring day today in the middle of an uneventful week so far. Glad I went to the cinema instead.

We have spent the entire week well within last week's range and just pivoting around the midpoint of that range around 2925. We've raised our hands briefly above the 2950 level and dipped our feet slightly below the 2900 and here we are back in the middle. It won't last long, it never does.

Both the 4-hour and Daily 200-period SMA's are also flat. And I'm hungry.