S&P 500 continues consolidation, thus we trade the range 2159-2173

The consolidation of S&P 500 continues. Until it finishes we continue to trade in the chopi.

We open a short position at price 2173, which is the upper shoulder of the consolidation, and with the lower shoulder we open a long position at 2159. The S/L should be accordingly around 2.5 points.

The range between the shoulders is around 14 points, which is relatively small, meaning that we could increase the exposure a little bit.

The probability for a breach of the lower shoulder at 2159 is higher, as until now, generally 3 factors were traded: possible Brexit risks, which will cause the central banks to not increase the interest rates, the satisfactory financial reports of the large structure-defining companies due to the low expectations. Now it became clear, that risks created by Brexit will not have an imact in the short-term, which unties the hands of Fed, with the effect of financial reports falling. That is why we should keep an eye while we trade.

If there is a breach below 2157, we should move to a larger time-frame graph and place our short medium-term orders, in orde to be able to trade with the August effect, when for the last 6 years, 5 of them had a correction larger than 5%.

While the price is in the middle of the consolidation we do nothing.

Stefan D. Angelov - Head of Stocks Trading

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