Price action is currently contained in a range between approximately 1370 and 1075. Behavior has been choppy since the low in October of last year, which marked the bottom end of the range.
Market behavior was once explained to me in a way I will never forget. Price action was compared to water flowing. You can tell the larger trend from temporary diversions caused by obstacles in the stream because prices are choppy and do not flow well when reacting to the obstacles. Think of rapids, or a big rock that causes a stream of water to curve slightly. Now, this may not be a perfect analogy, but I think it is a darn good one for a technical trader to keep in mind. It's certainly something that has stuck with me. Prices are pretty choppy to the upside right now.
Lot's of lines on a technical trader's chart typically me things in that particular market have kept him busy. What a mess! Patience is running a little thin. Stops for intermediate term longs are moving up to today's lows. A break below 1277.58 (cash market) takes us from an intermediate term long position back to flat. Although my patience is being tested, this tightening is very much due to an actual short term price pattern that formed over the past few sessions.
Action like this reinforces the desire to finish development and testing on those automated systems I've been writing code for. At least with them, we know to expect lots of whipsaws, and don't need to worry with it so much. The grass is always greener, right!
Moving average envelopes are in uptrend mode on both charts. A reason to hold onto longs if our tight stop is not taken out. RSI is above first level of uptrend support on the weekly chart, and slightly above second level of uptrend support on daily chart.
DTS indicator is providing good stop / loss levels for anyone who is long right now. Daily DTS stop is right where I mentioned my own discretionary stop is. Nothing is stopping this trend from running forward, I just don't have a good feeling about it. Sometimes you have to listen to your gut and at least tighten up the exits.
ADX registers non-trending behavior on the weekly chart, but shows trending behavior with the latest upside on the daily chart.
My Elliott Wave interpretation remains bearish. This interpretation will be wrong if prices move above 1370.58 (cash index). Confirmation for this interpretation, at least further indication for it, would come with a break below 1074.77 (cash index).
VIX is looking pretty complacent these days.
Put/Call ratio has declined. When people are not worried, it is the best time for a decline.
Bottom line: I am definitely willing to trade and follow the price trend upwards if that is where it goes, but I smell trouble.
Current Stance:
Long Term: Flat
Intermediate term: Long (with a tight stop, and I would not argue against a flat position right now!!)
Short term:
My propriety short term system is allowing trades to the long side right now. Changes in directional orientation as well as entries and exits occur more frequently than the weekly S&P posts to this blog.
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
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