SPX - Uptrend channel resistance

T

Trader.Fighter

Classic uptrend channel in SPX weekly or above charts can be witnessed in the chart posted below and we are nearby obvious main resistance.


SPX.png



What's your take on this formation ?

How would you position yourself considering the strong uptrend has no immediate higher resistance since it's making all time highs.

Can the uptrend end be predicted ?

Will you wait for confirmation before doing so ?

What are the chances the SPX goes parabollic and breaks out of the channel ?

If doing so, what are the chances of it being a fake breakout?

Trying to establish a discussion, please participate.

Thank you for doing so.
 
Nice chart...I was just looking at a monthly chart and realized we have not had a trend this strong since 05 (also 95'96)..not counting the very strong rebound from 666 in 08.
Only a fool would act on a prediction of an end. I simply respect the channel and "try" to position for the long side but buy the occasional put when it's cheap. It's hard though, such a strong temptation to "time" a turn. As long as we continue I will buy the dip and keep rolling those short calls out. Just not adding short calls...at least the short puts have done well.
 
The way I see it, the furious uptrend must be respected, but one needs buy and selling points. I like to draw a mid line in the channel.

Consider the bottom end accumulation and the higher end distribution, I certainly would not be a buyer at these levels but would not short it either.

Possibility of sideways action is always possible, eating the premium of put buyers and even calls.

Perhaps calls selling at the top channel line is not the worst idea.
 
My take part 1: No timeframe should be used as an absolute, especially with channels. You have the weekly timeframe here, dominant. Now show a channel on at least one or two of a lower frame. Use them in conjunction, with entries on the lower on breaks.

There is nothing to do 'up here'. The bottom line is doing all the work (pressure) and that is where the best decisions are made.



(Part 2: Another perspective: angle the bottom line to show the rising wedge. Moving fast, more likely to run out of steam/pressure. Again best decisions made using the bottom of the wedge, not the top.)
 
Satchel,

Good commentary, thank you for sharing it.

There's also a smaller uptrending channel inside the main one.

SPX_2.png


Will be interesting to see how the smaller timeframes act when and if there is convergence of both "Resitance" lines.
 
Quote from satchel:

My take part 1: No timeframe should be used as an absolute, especially with channels. You have the weekly timeframe here, dominant. Now show a channel on at least one or two of a lower frame. Use them in conjunction, with entries on the lower on breaks.

There is nothing to do 'up here'. The bottom line is doing all the work (pressure) and that is where the best decisions are made.



(Part 2: Another perspective: angle the bottom line to show the rising wedge. Moving fast, more likely to run out of steam/pressure. Again best decisions made using the bottom of the wedge, not the top.)
More...

Good advise...I look at the 4 hr to find dips to long...your right abt #2 ...there is a rising wedge...patience to wait for the opportunity..tough
 
Quote from Trader.Fighter:

Classic uptrend channel in SPX weekly or above charts can be witnessed in the chart posted below and we are nearby obvious main resistance.

What's your take on this formation ?

How would you position yourself considering the strong uptrend has no immediate higher resistance since it's making all time highs.

Can the uptrend end be predicted ?

Will you wait for confirmation before doing so ?

What are the chances the SPX goes parabollic and breaks out of the channel ?

If doing so, what are the chances of it being a fake breakout?

Trying to establish a discussion, please participate.

Thank you for doing so.
More...


I've never had much luck fading in these scenarios. There's nowhere to anchor your risk in terms of shorting and price action at trend extremes is really unpredictable. What looks like obvious topping action can still just die and grind to new highs, or chop sideways for an extended period. Best to stand aside and wait for a clearer scenario before initiating any trades.
 
Quote from Trader.Fighter:

Absolutely, but this is precisely why I suggested the selling of premium.
More...

I would NOT sell premium here. I think there is a decent chance of a parabolic upside move coming here. As the old saying goes, the market doesn't give you this long to sell a top. And then you pointed out, we are "obviously" at the top of a channel that everyone sees. We've been basing here for two weeks now. Rarely do markets break through strong bases that they form. No, this base is a launching off point in my opinion. What I have always found that really helps is to put away the index chart and look at the charts of the sectors and the leadership stocks. The sectors give you a more clear picture.

BTW, AAPL is breaking out as well to the upside.
 
Time is often more important in channels than price.

Late August is the time window for this channel.

Sometimes, abnormal option volume will help pinpoint the event day.
 
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