19 Feb 2023 SPX Weekly - Bearish Sentiments

Accuracy: 50/55 (90.91%)

SPX below 4200 - Correct

Last Week

We basically started the week around 4080 and closed the week around 4080 after CPI and several FOMC members speaking. Overall it still looks like we're getting slightly lower highs and lower lows for the past 2 weeks.

This is also kinda continuation of what's happening the week before as well which is what I said in last week's post. That's why the prediction is below 4200.

Economic Event

It's a shorter week with Monday holiday. Looking at the events next week although nothing super important other than FOMC minutes, my mind is already plotting some market movement scenarios.

Kind of a continuation of sentiments from last week, CPI didn't come in expected, FOMC speakers seems to be tuning slightly bearish, the general market sentiments now just feels slightly on the bearish side. With more of these minor related events coming next week, I'll guess the bearish sentiments continues. Which also correlates with the chart for next week I'll be showing below.

Next Week

We have quite a nice pattern forming in the daily chart. We have a nice uptrend support trendline that kinda coincide with the 4000 area.

Green - 4200 remains the previous high to be challenged
Yellow - 4000 which aligns with the slightly bearish sentiments
Red - 4900 if it goes really bad, this is the worse case

At this point many factors already point towards the 4000 mark, which is the nearest term downtrend continuation. But I'm also seeing something else to be added, Fibonacci.

On this uptrend since start Oct 2022, the first bounce happened between the fib 50-61.8. Now we're on the next wave up and retracing, drawing the fib shows us the 50-61.8 is around 3930-3980. Pretty close to the 4000 area too.

Prediction

Somehow it seems there are many signs showing market will slow play towards 4000. Not sure if its just obvious or I'm getting better at identifying them after doing them again and again every week. So I'll continue the prediction that it'll not break the 4200 previous high.

SPX below 4200

Paper Trade

Selling an iron condor with the profit zone near the slightly bearish area around 4000 with no upside risk seems pretty good fit to my prediction. Not only this play matches well in the area I'm targeting, it also matches in terms of how I'm predicting the market will move. Basically slow consolidation follow by slow bearish moves.

If SPX goes up, keep the $50 profit with no complains.
If SPX goes down slowly like I expect and expire near 4000, that's my best case with max profit of $550.
If SPX goes crazy bearish, that's potential worse case which is my least expected scenario. This scenario needs to be watched and possibly exit the trade if SPX goes near 3945 area.