The market seems to be reaching for the 200-day moving average. There are two spots I'm looking at. One is just shy of the 200-day MA, the other, just beyond it.
The first target is a 61.8% Fibonacci extension at 1268, the second is the 1276 area, a confluence of two separate 78.6% zones made up of a Fibonacci retracement and an extension target. The 200-day MA is at 1273.05. So you can see, there is a good deal of potential work to do at these levels.
Should the market (always the S&P in these posts; that's all I chart) get to the 1270s, I will be very keen on being short with inverse ETFs such as SDS, SH, SPXU, or RSW. I like using these for positions instead of futures. I like to save futures for hedging which requires quick hits. The ETFs I let ride with the trend.
The reason I will be keen for shorts in the 1270s is that the risk is then less than 20 points to 1292.66 for this particular pattern. The payout could be much, much larger. Back to the 1160s or perhaps even 1074.77. It's too soon to tell, but let's just say I like the potential risk/reward.
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