Long entry: 2340-2349
Stop loss: 2335
The ideal entry price for my original idea was reached yesterday:
I had published my chart on Wednesday before the spot market opened. The market opened Wednesday above the 50 day simple moving average, but then bears won the trading day and the index closed below this key line in the sand. Then on Thursday the S&P 500 opened bearish below the Wednesday close (and below the 50 day SMA) and proceeded to close very bearish at the lows of the day.
The market was closed on Friday due to Easter and so the S&P 500 went into the weekend with the start of a bearish trend - highlighting a potential total mean reversion of the Trump rally; instead of a minor bounce higher supporting the overall uptrend, which I had anticipated for Thursday.
This strong decline on Thursday surprised me. But as I learned in hindsight using backtests, closing below the 50 day SMA is one of the most reliable moving average based short signals. It is more reliable for going short in the short-term than for example going short when the S&P 500 closed the day below the 20 day or below the 200 day SMA.
Nobody can predict how much the recent emotional fear of a market crash will calm down over the long Easter weekend. Which might bring back some risk taking bulls into the market who were absent on Wednesday and Thursday. Or if the potential extra research time the long weekend might provide to some investors is going to flip more bulls to join the growing number of bears.
Until proven wrong by the market I now prefer following my bearish scenario:
This is how I went into publishing this chart recommending a long, also because I had some very early buy signals on my own, which worked during the rally in the recent past and most of these had just started to flash new buy signals starting on late Tuesday, early Wednesday. In the end everything I used to get an idea for the short-term was wrong. Maybe also because of the unpredictable very negative political news which had dominated those days.