A Quick Level Planning SP500 Update on the Bull Trap Breakdown

Apr 30, 2015: 2:57 PM CST

Today’s Breakdown under support officially triggers a “Bull Trap” Outcome and tilts the market to the bears.

Let’s get a quick perspective on the breakdown and highlight the key levels to watch right now in the S&P 500.

Here’s the Intraday  Hourly Chart which zooms-in the perspective of the Trap:

I stressed to members the weakness occurring at the highs and the dominant thesis calling for a bearish outcome of the weak breakout – with massive negative divergences – to new highs.

We’re seeing that downside action play out now both with a logical movement down away from the 2,115 level and now under the 2,100 key trigger level.

Just today, price broke under the 2,095 level which is beneath the 2,100 “Round Number” Reference level and the rising intraday (blue) trendline as drawn.

Before I could post the update, price already achieved a key downside target (also highlighted to members) into the 2,080 zone which was the prior low and the 50 day EMA (daily chart).

Right now, we’ll reference the 2,075/2,080 zone as the key short-term pivot and highlight a “Neutral Zone” above 2,080 to 2,095.

If price breaks above the 2,095 and 2,100 (back above) levels, it could surge back tot he 2,115 level to challenge the high again (but that’s an alternate thesis right now).

Here’s the Daily Chart and higher frame level planning:

Notice the Bearish Reversal Candle that peaked above the 2,120 level.  Now, be sure to read my prior open blog post entitled “Bearish Engulfing Candle at the Highs and S&P 500 Planning” which strongly suggested a likely downside outcome – precisely the one we’re seeing now.

No, a downward reaction was never guaranteed but it was the logical outcome given the build-up of bearish evidence at the highs and the weak price action on major divergences.  It’s refreshing when price does what it “should” do  instead of surprising traders.

For extra analysis, be sure to study the broader trading range discussed in the “Updating and Planning the Current S&P 500 Range Play” post.

What now?

Price just achieved its first downside target into 2,080 so be on guard for a brief bounce.

Under 2,080 opens additional sell-pathways toward 2,065 (range high) and then the 2,045 level.

Note the rising 200 day SMA which could easily come into play as a downside support-bounce target if sellers do continue to win the supply/demand game.

Despite the pullback happening now, the market isn’t really “in trouble” or confirmed bearish unless we see the index under the 2,000 level.

For now, focus on these key short-term pivot levels as we turn the corner in to the month of May.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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4 Comments

4 Responses to “A Quick Level Planning SP500 Update on the Bull Trap Breakdown”

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