1. There is a perfect head and shoulders pattern forming on the spx daily (see chart below). Intraday we may still look to action a long position but a strong close below the neckline - 881/880 will be an extremely bearish signal. In this event we will be short.
2. The 200-day MA (Moving Average) is sitting at 874.5 no less! Again, a strong close below this level will further underline the case for effecting a substantial short position.
I cannot overstate the importance of the above for the S&P500 going forward over the next few weeks. Should both of the above transpire - a strong close below the neckline and the 200-day MA- then the potential retrenchment over which so many are now musing, will surely materialise.
Happy Trading all!
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