Updating SP500 Structure as Expected and Planning the Next Swing Again

If you followed yesterday’s morning update, then you’ll find today’s market action is exactly what was suggested (a sharp downside swing) from the “Planning the Next Swing from Color Structure” chart I highlighted previously.

Let’s update the market, note what happened (faster than expected) and plan the NEXT swing for price:

Be sure to read yesterday’s post so you can set the stage for today’s sharp decline – I also discussed this scenario in the evening planning report for members.

We have the market falling sharply from the upper rising trendline down toward the lower rising trendline target.

I highlighted this as the most logical or most likely outcome, with the alternate (or unexpected) thesis being a surprise breakout higher.

Now, we face the exact same parameters in terms of planning, but this time we start from the bottom and plan a bounce.

Should the market hold the rising trendline structure (as has been the case since early June), then expect a pause and support-bounce to develop here near the 1,960 target which could lead to another buy-swing or rally in price.

At this point, we’ll note the alternate or ‘surprise’ outcome would be a breakout and destruction of the rising trend structure and we would trigger aggressive bearish (short-sale) trading strategies beneath the 1,960 and 1,955 levels.

Include these simple planning levels into the other types of chart analysis you use to select trading candidates.

Join me for a Live Webinar Thursday:

Also, I’m excited to be teaching an educational webinar with Trader Kingdom this Thursday (July 10th) at 3:30pm EST entitled “Stalking the Short-Squeeze: Protection and Profit from Unexpected Events” which will help you increase your ability to plan market events (and trading strategies) like this.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).