Real Long Position in S&P500 to back my View of a New All-Time High

Real Long Position in S&P500 to back my View of a New All-Time High

COPPER & WHEAT

Following the last week's blog post, both Copper and Wheat started to show increased signs of distribution. There are distinctive consolidations in both instruments, and now the only thing needed is to see a breakout of the fulcrum points

CANADIAN DOLLAR 

Canadian Dollar requires more attention. If you recall from last week, we had a short-term COT pattern pointing to the downside. That came when the CAD reached a previous top (possible resistance) and a seasonal peak. 
Since then we saw a good complex signal, that came after the stop-losses from the first selling wave (last week's chart top).   

Canadian Dollar analysis

As you can see from the chart above, after an inside Long Nose day the next day opens above the inside. Then with No Tail, it collapsed. The On Balance Volume (Green line) also shows the good distribution. 

As we approaching the steepest part of the moving-down seasonal chart, we can expect the move down to continue.

What's interesting is that the inside bar on Friday saw more volume than Thursday, no matter the fact the Friday's range is two times smaller than the previous one. That doesn't happen very often. Usually with larger range comes larger volume. That makes the high and low of the inside bar very important. 

Silver has also a short-term COT buy pattern. But that large EQ day there means the end of the move and it doesn't, at least for now, supports the COT pattern. So I am staying on the sidelines here. 

S&P500 

I still believe it as more probable to see new all-time-highs, and I have another long position from this week to back my words. But even an optimist like me has to admit that reaching those highs won't be easy. There is clear support when the market starts to fall but the buying disappears on higher prices.   

I've bought when the first outside day (Wednesday) was clearing the highs of the previous bars. 

S&P500 analysis

On the chart above, three target levels are shown, which can be hit if the market breaks above the last top (07/23/2020). As you can see even the targets from the current move are barely suggesting that the highest high is reachable. This is once again to prove how hard would be for the market to make a new all-time high.  Since we are approaching the crest of the cycle, and we are now in a seasonal period when declines can be expected we can't ignore the downside. If Friday's low is penetrated, a lower short-term high will be created. If that happens on Monday, it would mean closing lower with 78% probability (1xN). If such breakout happens, with good distribution (OBV or other measures you are using), we can expect the move down to continue towards 3143. 

Now, let's find your missing piece!

Vassil Banov,
Founder of Piece of Trading


Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer
Seasonal indicators courtesy of Larry Williams, ireallytrade.com. Charts made with TradeStation®. tradestation.com

TAGS: S&P500, SPY, SPX, COT, Commitments of Traders, Copper, Canadian Dollar, Cycles, Fundamental Analysis, Price Action Trading, Silver, Seasonals

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