Sell signal

I sold everything today cashing a nice 120 points profit on SPX. EMAs did cross and price is now slightly bellow rising 5 days SMA. There is a 5-6 days downtrend line that acts as resistance, another bearish sign. SPX may have another attempt to climb above this line before going down.

I am not going short yet since I am not 100% convinced the intermediate trend has turned south for good. Daily DMI is still positive for SPX and hourly EMAs are barely descending, a sign that some bulls are still hopeful. If tomorrow I see market continuing to go down I am probably going to jump on some short ETFs, SDS, QID or the relatively new guy in town, SQQQQ, a 3x Nasdaq short ETF. I don't like FAS-FAZ pair and any Direxion ETFs as a matter of fact, except, maybe TNA-TZA.

You must understand that EMA25-EMA50 pair on hourly chart is not a magic pair, it had a very good degree of accuracy lately but you can get whip-saw here and there. Last year, from November to December, it was a terrible time for me, market traded in a tight range (1090-1115) and I've got whip-saw 3-4 times before I decided to stay away from the market until I saw a big jump above the resistance line. Please notice this is a daily chart so don't pay attention to EMAs. Bellow I posted a 4 hours chart. There you can look at EMAs crossing (adjusted to 6 vs. 12) and 5 days SMA (adjusted to 30). Sorry for the confusion.

As a confirmation of the potential downtrend we should keep an eye on daily DMI that is slightly positive for SPX but is practical neutral for DOW and Nasdaq.

A 10 points drop on SPX tomorrow is going to convince me to go short.

All the best!

babaro

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