Nearer term $ index outlook :
In the Apr 18th email, once again affirmed the bearish view since the Apr 11th email of declines back to 98.85 (Mar 27th low) and even below. The market has indeed continued lower since, currently testing that 98.85 low. With still no confirmation of even a short term bottom, there is scope for a downside break (see in red on daily chart below). But be warned further such declines may be limited and part of a more major bottoming. In the bigger picture, the view since Jan of at least a few months of wide consolidating, seen as a large correction (wave 4 in the rally from the May 2016 low at 91.90) and with eventual new highs above 103.80 after (within wave 5) remains in place. Note too that lots of support lies just below the 98.85 low at 96.35/60 (falling support line from Feb, base of large wedge-like pattern since Jan, bullish trendline from June 2014) and would be an "ideal" area to form that more important low (see in red on daily chart/2nd chart below). But I do use the term "ideal" as there is still no confirmation of that short term low (and larger bottoms begin with smaller ones) while there is always the potential of a downside acceleration (currently seen as a low risk, but a risk none the less). Nearby resistance is seen at 99.20/35 and the bearish trendline from Apr 10th (currently at 99.75/90). Bottom line : still no confirm of even a short term low, but downside below that 98.85 low may be limited and part of a more major bottoming.
Strategy/position:
Still short from the Apr 11th sell at 100.75. For now with the magnitude of further downside likely limited and part of a more major bottoming, will use an aggressive stop on a close 15 ticks above the multi-day bearish trendline (cur at 99.25/40). This also illustrates the difference between a "view" and a "position". In this case the preferred view is one of limited further downside as part of a potentially more major bottoming. However, there is still no confirmation of even a short term low and there is the potential of a downside acceleration. Though that potential is seen small, remaining short keeps the short position open temporarily while the aggressive stop will quickly get us out if such a downside acceleration does not occur nearby (limited risk).
Long term outlook:
As discussed above, still favor the view that the rangy trade since Jan is a large correction (potential near its completion) and with eventual new highs above 103.80 after. However, such gains above 103.80 (if they do indeed occur) may be limited and part of a more major topping (years ??, see weekly chart/3rd chart below). Lots of long term negatives add to this potential and include negative technicals (see sell mode/bearish divergence on the weekly macd) and the failure to build in the Jan highs above the Mar/Dec 2015 peaks at 100.50/poor upside momentum. Note too that another upleg above 103.80 would be seen as the final upleg in the rally from May 2016 (wave 5) and the final upleg from May 2011 (wave V), while long term resistance lies just above at the ceiling of the multi-year bull channel (currently at 104.75/25). At this point with gains above 103.80 favored, this view of a more major topping is just something to keep in the back of your mind/a longer term risk to be aware of. Bottom line : downside action since Jan seen as a large correction and with an eventual resumption of the longer term gains above 103.80 after (though still no confirmation that the downside is "complete").
Strategy/position:
For now with the market seen in process of a larger bottoming, looking to switch the longer term bias to bullish from neutral. However, with that nearer term scope for further downside/bottoming, would be patient for higher confidence of at least a short term low to switch (larger bottoms begin with smaller ones).
Current:
Near term : short Apr 11th at 100.75, aggressive stop on close 15 ticks above multi-day bear t-line.
Last : short Apr 4 at 100.55, stopped Apr 7 above wk long rising t-line (100.95, closed 101.20).
Longer term : downside from Jan seen as large correction, looking to switch back to bull ahead.
Last: :bull bias Feb 7th at 100.35 to neutral Mar 28th at 99.75.
