But, we’re nearing the point where betting on the downside is looking like a good trade…<\/p>\n
Let me explain…<\/p>\n
Take a look at this 60-minute chart of the S&P 500…<\/p>\n
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This is a 60-minute chart – which plots data points on the chart at the end of every hour. It’s a short-term look of the stock market. And, patterns on this chart tend to play out within about five to seven trading days.<\/p>\n
The interesting thing about this chart is how well it defines short-term, tradable trends in the market. For example, each time the S&P 500 crosses its 50-period moving average<\/a> (the blue line, which is the 50-hour MA since this is a 60-minute chart), the index tends to make an extended move in the direction of the cross.<\/p>\n Traders would have done quite well over the past three months by simply buying the S&P 500 when it crossed above the 50-period MA on this chart, and then selling that position and going short when the index crossed back below its 50-period MA.<\/p>\n In other words… buy on the blue circles and sell\/short on the red circles.<\/p>\n The last signal from this chart was a “buy” signal just before New Year’s Day. The stock market has gone pretty much straight up ever since then.<\/p>\n But, this current uptrend is getting a bit “long in the tooth.” The decline in December lasted about three weeks. The current rally in January is a little over three weeks old as well.<\/p>\n So, I’m thinking it might be time for this chart to cross to the downside. I haven’t yet taken a short position. But, I’m getting anxious to do so. <\/p>\n Because once this chart breaks to the downside… then look out below. We could see the S&P give back a good chunk of its recent gains. A move down to 2510 or so would be a decent target.<\/p>\n So… yes… I’m leaning a bit bearish for the next week or two. But, until this chart actually breaks down, the bulls remain in control.<\/p>\n Keep an eye on that 50-hour MA level near 2637. A close below that level at any point over the next few days should shift the short term trend to bearish.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n![\"signature\"](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
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