It took three days, but we finally got the quick decline I was looking for.
On Monday, we looked at a 15-minute chart of the S&P 500. We noted how similar the chart looked today compared to late February – just before a swift three-day decline. The S&P 500 was bumping into resistance. Many of the technical indicators were stretched into overbought territory. And, while not illustrated on the chart, we noted how the financial television talking heads seemed quite bullish again.
So, we had a good short-selling setup for aggressive traders. If you took that trade on Monday, then you have a modest profit today. It’s time to close that position, buy back the short sale, and take the profit off the table.
No… conditions haven’t turned bullish all of a sudden. But the risk/reward setup of being short stocks right here is no longer as favorable as it was on Monday.
Here’s an updated look at the 15-minute chart of the S&P 500…
The index is no longer bumping into resistance. Rather, the S&P 500 is quickly approaching support near 2740.
Technical indicators, like the MACD and RSI, are no longer in overbought territory. They’ve dipped to oversold levels.
And the financial television talking heads – while not turning outright bearish – have definitely become more cautious this week.
The short-term decline we were looking to start on Monday has happened. It wasn’t as severe as the decline we got in late February. But it was enough to generate a decent profit for anyone aggressive enough to short stocks.
Now it’s time to take the profit. Traders can step out of the way of Friday’s option expiration and next week’s Federal Open Market Committee (FOMC) meeting. And we can wait for the 15-minute chart to give us another good risk/reward trade setup.
Best regards and good trading,
Jeff Clark
Reader Mailbag
Today, we hear about a Delta Report subscriber’s Q1 results…
Just wanted to say thank you for your Q1 calls Jeff! My portfolio is up 65% with 2 weeks to go in the quarter… hoping to push it to 70%. I don’t make every investment you recommend, but if I can do 70% a quarter for the rest of my life, I’d be a pretty happy man.
I am a CEO, and know how much time it takes to reflect to your constituents a record of your actions, which is why I really am impressed with not just your excellent record this year, but that you took the time to detail it like you did. I’m a bit embarrassed to say that I don’t even track my own investments to that detail. But I do know that my portfolio is up 65% this year so far, and that is mostly because of your great calls. Keep up the wonderful work Jeff! A happy lifetime subscriber.
– Justin
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