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S&P 500 – buy rumors, sell facts?

Monday Asian session towards the end and early European trading went into cheerful risk-on mood as US-China trade talks remain the main topic for the week.  It is rather strange, to be honest, as almost every bit of positive news (or even no news at all) leads to rally. It is difficult to imagine such an optimism as currently we witness only mid-level talks and no sensible results were reported yet. 

More high-ranked US-China talks and meetings expected later this week and eventually all agreements – if any – will be finalized and announced during  Trump-Xi meeting – and no date is agreed yet.

At the same time, this kind of behavior when markets ignores everything and just rally – is a clear sign of strong bullish trend. But there is also possibility of classic “but the rumors, sell the facts” sell-off scenario later this week.

S&P 500 daily chart

Looking at technicals makes me cautious as the price is slowly approaching 2734-2748 barrier again. Break above is certainly possible, however, I would be more willing to bet on shorts after such an impressive rally.

Shorts from current levels and scaling into position at 2730-2740 remains my trade. This time rally attempt will go for possibly higher than previous maximum, so it makes sense to wait for the price to arrive at 2745-2750 and sell from there. Close stops above this level are mandatory, because, if resistance cluster is broken, then next target is 2810.

Major supports below are still the same – 2640 and 2598  levels – those are good to watch for potential bounce if price corrects to that area. 

Have a nice week,