We sold 1/2 std size of SPX at 1560.15 and 1/2 std size of NDX at 2805.45.
We add those short positions to our short term positions.
We introduced one order on the CAC40: sell 1 CAC40 at 3785
Looking at the chart, we can notice that the momentum is fading: until recently, the market evolved in the upper part of the uptrend channel (above the blue line for wave 'red 1' and 'red 3'), but now the market is in the lower part of the uptrend. This tells us that the advance is coming to an end.
But the main question is: Are we close to the top or did we already reach the top?
Our core scenario is that we still need one more high in order to finish the current advance (should be less than one week from now). Thereafter, a powerful setback will occur.
The alternative scenario is that we have already reached the top and the market is in a distribution phase prior to acceleration to the downside. Looking at the wave pattern it would be possible: subwave 4 blue = triangle (clear on intraday) but subwave 5 would be very small.
But there is no negative momentum at this stage, so we consider this scenario as an alternative one.
Looking at our indicator, the Sigma Trend Index remains above the zero line, the Swing moved from '2' to '4' ('mild' positive signal)
Our short term model remains in 'buy' mode for both the SPX and the NDX:
Conclusion:
We believe we haven't reached the top yet, but we are very close to print it.
March, April and May are often important turning points in the market: since 1993, 44% of major corrections (above 10%) started either in March,April or May.
We are ready to open new positions if/when we get a sell signal from our short term model.
Short term positions:
- no more position
Medium term positions:
- short 3 SPX at 1446.09
- Short 1 NDX at 2758.8
- short 2 CAC at 3251.07
The market fell back on Thursday and retested Tuesday's lows. So, either we are in a 'c' (abc move) of 4 or the top was achieved on last Friday.
At this stage we continue to favor the 'abc' scenario because current move doesn't look impulsive (not enough violence in the decline). This scenario will be invalidated if the market decline below the horizontal pink line (no overlap allowed between weve blue '4' and blue '1', it is a rule)
Core scenario:
Alternative scenario:
The Sigma Trend Index is close to zero. If we are in a wave 4, the market must bounce back soon.
The Swing was at '2' on Thursday, telling us that the decline was 'slightly impulsive'.
As we haven't reached stop levels from our short term model(1532.16 for SPX and 2767.45 for NDX), it remains in 'buy' mode for both the NDX and the SPX
Conclusion:
We have no reason at this stage to open a new short term position, and we are comfortable with our medium term short positions
Short term positions:
- no more position
Medium term positions:
- short 3 SPX at 1446.09
- Short 1 NDX at 2758.8
- short 2 CAC at 3251.07
The market resumed its advance on Wednesday. So, we feel rather confident with current wave count.
If this scenario is the right one, we should reach higher levels in coming days.
Thereafter, a meaningful pullback/correction should occur.
Our indicators remain in favor of further advance: the Swing moved to '4', telling us the trend remains bias to the upside.
There is no change in our short term model, it remains in 'buy' mode for both the NDX and the SPX:
Conclusion:
The chart analysis is fully in line with our indicators, there is no sign of reversal at this stage.
Short term positions:
- no more position
Medium term positions:
- short 3 SPX at 1446.09
- Short 1 NDX at 2758.8
- short 2 CAC at 3251.07
We add 2years charts of the results generated by our short term model (data are in points) on both the SPX and the NDX.
As we wrote in our daily, this move doesn't look impulsive and we didn't get any 'sell' signal from our ST model.
In this context, we decided to close our ST short on the CAC40 with a nice gain: 3852.02 - 3793.06 = 58.96 (gains)
Our Twitter account is @SigmaTradingOsc
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