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UPDATED Flash Technical Trade

On August 28th, we provided short term traders with a low-risk entry point to short the S&P 500, anticipating a pullback into the August 31, 2018 Federal Reserve SOMA portfolio maturity (QT).  It is now time to take profits, if you haven’t done so already.  The maximum profit to-date has been 27.50 points, or $1,375 per contract.

Specific to this trade, we believe the weakness in the first two trading sessions of September are due to the liquidity drain of the SOMA portfolio maturity.  July 2018 also had a SOMA portfolio maturity on the 31st and the low close for August was realized on the first trading session, with the low price for August realized during the second trading session. September might likely look similar with the lows of the month established in the first couple of days.

Subscribers to our work are encouraged to read the September edition of The Cartography Corner, as an important support level for the S&P 500 highlighted in it is close to being breached. If breached there is little resistance in the way of a larger decline.

The link below penned by GTA provides a user’s guide to this analysis.

GTA Users Guide

Flash Technical Update

J. Brett Freeze of Global Technical Analysis believes the S&P 500 is presenting short term traders a low-risk entry point to short the S&P 500, anticipating a pullback into Friday’s Federal Reserve SOMA portfolio maturity ($11.4B liquidity drain). A confluence of six resistance levels lies between 2895.50 and 2912.50 as shown on the graph below (red box). Currently S&P futures are trading at 2901 and above three of the six resistance levels.

Traders can establish a short position below the highest resistance level of 2912.50 and limit risk with a stop loss order on a daily market close above 2912.50. The potential downside for the S&P 500 is 2835.50 as circled in the graph. If the market closes above 2912.50 traders should then use that as a pivot point, whereas you are long the market above 2912.50 and short below that level.

The link below penned by GTA provides a user’s guide to this analysis.

GTA Users Guide