S&P500 Chart – 2 Day View

The S&P500 stock chart looks different over the last two days (Mon, Tue) than it’s usual straight up line. Above is a two-day S&P500 view by way of the SPX product. Each bar represents ten minutes.

Monday began (at the first down arrow) with a thirty-five point drop from about 4,475 to 4,440 over the first hour of trading. Then at 10:30am, the market made a huge reversal. And by end-of-day Monday, the S&P was back to a new all-time high. The Afghanistan news did come out on Sunday. Perhaps that was the initial cause for the drop. But the market brushed that off quickly.

Then, after the Monday market close, the market dropped again into Tuesday morning (the second down arrow). Only this was a bigger down move of approximately sixty points (from 4,480 down to 4,420). The market remained down through the early afternoon. And once again, sometime after noon, the market reversed directions to end the day on an upward trend, though still ending the day down at 4,448.

What does this mean for tomorrow? I have no idea. Will this new trend continue? Is it the start of a longer-term down trend in the market? Or will the market regain it’s bullish ways and hit another all-time high this week? I obviously have more questions than answers.

Stocks have been volatile over the past two days, pulling off of the all-time highs ever so slightly. There is the possibility of a short term pullback in order to consolidate. An up and down market that grinds to the upside is healthy. But what we have seen for quite some time is a straight up bull market without a meaningful consolidation.

I have had a Bear outlook for a long time, thinking the market has been overextended. Yet, I have been wrong for quite some time as the market has continued to propel up. I can finally say that today (and almost yesterday) was a great trading day for me personally. Recently, as the market has gone up, hitting new highs, I have been trading mostly with stock options, putting on Bearish trades. That means my trades make money if the market goes down. After the thirty point drop on Monday morning, I did not close out my winning trades. And that turned out to hurt me. As by end of day on Monday, all my gains for the day had disappeared. In the last hour of Monday trading, I decided to put on a few more Bearish trades.

Then Tuesday morning rolled around, and it was deja vu. The market was down again. Only this time it was down more, and my unrealized gains were bigger than Monday. Once again I held onto most of my trades in the morning, although I did close out a couple. Then, in the early afternoon, I noticed the same trend as Monday. The market began to base and started to head back up. Only this time, I quickly decided to close most of my winning trades. Success!

Then as the day wore on, I did put a few new trades on. I still used ‘stock options’ for today’s new trades. Initially, the new trades I put on were long positions, where I make money if the market goes up. Then after a little up move, I decided to put on additional short positions, where I make money if the market goes down. Both types of trades are now on together. As the market was showing signs of strength in the afternoon and into the close, I want to be long the market in the short-term. And as I’m really not sure which way the market will go short-term, I decided to put on a couple of Bearish trades as well. The best scenario regarding my current stock option holdings is that the market stays in a range short-term. That way I win on both sides. However, should the market go straight up or straight down, one side will be a winner and one side will be a loser. But at the moment I’m not concerned if the market goes higher, causing a loser on my short trades. As we would once again be near all-time highs if the market goes back up now, I would be comfortable holding on to my short positions.

I have begun throwing out the term stock options in this post and another recent post. Sometime soon, I’ll take a stab at explaining what they are and how they work.

Until next time, good luck trading!


4 thoughts on “S&P500 Chart – 2 Day View”

  1. How in the world do you keep your blood pressure steady? The stock market can be so volatile and my understanding of options is that they are even more so. Perhaps it’s that I’m not much of a gambler. I prefer holding on long-term.

    1. Hi Angel! Thanks for reading and commenting. Yes, trading can definitely be stressful for me. And I’m a certified stress management instructor, lol. I looked around for professionals to invest for me but I was not happy with their approaches. I’ve spent several years learning various ways to trade in order to gain knowledge and experience. I feel that I’m ready to implement various trading methods now, on both long and short term trades. I’m a buy-and-hold trader at heart, but not investing long at these high prices. Wishing you well.

  2. Hi Marc,
    I have a friend who has been working in the investment field for many years. She shares her experience in analyzing various reporting services to create a broader view of the trends.
    She posts on facebook regularly as :
    If you are interested in the insights of others, you might find her posts interesting.
    Blog on!

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