I developed my market model in order to generate high probability buy and sell signals on S&P500. These signals guide me in the marketplace and inform my long-short relative positioning. This post will discuss the breadth and technical indicators I use in the market model and how the model generated 2 major sell signals in 2018.
A large bull call spread was placed on LEN today. The trader purchased 10,000 of 15 Nov’19 calls at the $60 strike and sold the same number of calls at the higher $65 strike betting $640K on a continued rise of the stock. If he is correct, the initial bet will turn into $4.4m (or 700% return).
A moving average helps a chart reader see the overall price trend in a stock. Traders widely use the 200d MAs as indicators of long-term trend. For example, if the stock is above / below its 200d MA, it is believed that the stock is in the long-term uptrend / downtrend. We can apply the same logic for a group of stocks via the SPXA200r indicator.
After losing 50% of my capital in late 2009 – early 2010, I decided it was time to develop my own system of navigating S&P500. It took me several months of study and research to come up with the best set of indicators for my market model. This post will explain the logic behind the buy and sell signals that my model generates.
If you follow fintwit bears, they all point out to the broadening formation on S&P500 and imminent bearish consequences for the stock market prices. I decided to review the daily chart of S&P500 for the last 50 years to see if there were any broadening formations in the past and what was the resolution of those formations.
If you are a swing or position trader, you should definitely consider adding the S&P500 Advance-Decline Percent index in your trader’s toolbox. This great indicator can provide both bullish and bearish signals and keep you on the right side of the trade.
The 2009-present bull market has lasted for over 10 years. Without any doubt, it will be over one day. Based on the historical precedents, the market breadth indicators will give us enough clues to get ready for a new bear market. Let’s examine two recent tops of 2000 and 2007 to see how the Advance-Decline Line behaved during those two periods and see if there are any warning signs today of a potential reversal.