S&P 1350 or 1500?

Discussion in 'Trading' started by doublea, Apr 21, 2007.

  1. doublea


    I think this market is going to decline soon. Some of the things that I follow are pointing towards a decline.

    Here are the things that I am looking at.

    1. Rising bond yield.
    2. Junk bond funds unable to make a new high.
    3. Nasdaq and Russell not participating as in other rallies. Usually they are leading DOW and S&P.
    4. Lots of Bullishness among the advisors.
    5. AMTD unable to rally in this run-up.

    Based on all these factors, a decline is very likely. The question is when. I am not sure (maybe when Blue turns bullish?) but I am going to stay in cash. I do not want to step up here and short here but if I see any weakness I might short some. There is another time based indicator that I follow and that points to a sell-off this week.

    A close below 1350 in S&P is more likely to happen first than a close above 1500 on a weekly basis. After that the FED will start cutting interest rates and we'll see another run-up like in 99-00.

    I guess we'll find out soon.
  2. doublea


    For all the options people here. What can I do to profit in case of a decline. I am thinking about buying May or June puts.

    Let's assume a 3 to 5% decline in the next 2 months. What would give me the best risk to reward? It can be on QQQQ or IWN.

  3. doublea


  4. It is not possible to speak to the actual numbers, but if one looks at RSI, it is likely to fall before rising again.

    There is no uninterrupted linear ascent.
  5. doublea


    My question is if the scenario that I presented occurs, how do I profit from it? I can buy QID but wanted more reward for the risk. I have no idea about gamma, delta, vega and as such.

    I'm not loking at RSI or any technical indicator besides MA.
  6. ==============
    QQQQ like June puts tend to be more liquid;
    and ES/SPX could easily hit 1500/ SPY $150 plus,while QQQQ declines 5%+.

    QQQQ frequently diverges, frequently more bearish;
    its down from $120 area

    Wisdom is profitable to direct.
  7. doublea


    You're right. I should have been more clear. The 3-5% decline is for S&P. In this case IWM and QQQQ should decline by more than S&P in percentage, maybe 5-8%.

    I am expecting the overall market to be weak and Nasdaq and Russell to lead to the downside.

    It is very unlikely for QQQQ to decline 5%+ when S&P is making a new high.
  8. S2007S


    Im bearish but my prediction is bullish

    The S&P 500 sees a 2% decline, then breaks out to new record highs my mid to late may, where it heads from there is anyones guess.

    I give it a 95% chance the s&p 500 breaks out, they hype is there, the dow is up 15 out of 16 days and likely to break 13,000 as early as Monday morning.
  9. lol, we just covered the gap. isnt it unlikely well see a steep decline now?...infact mkt should continue the found again trend and make micro-corrections along the way. odds say that.
  10. doublea


    DOW 13000 is very possible which is less than 40 pts. from Friday's close. Same with S&P, I think it will get to 1500 but I'm not sure if it can close above 1500 on a weekly basis. If it does, the next target is around 1560.

    I think a short trade here provides good risk/return ratio. Stop will be the close above 1500 on Friday.
    #10     Apr 21, 2007