#1 Edition April 9th 2012

Short position stops have been triggered several times of late, signalling that the upward trend although weak its still alive. As you can see there have been a couple of times in which we have been left out of the market in case we didn’t have strong conviction views or re-entry procedures

Long ExtremeStop: as of past week’s close the stop goes up to 1391. Means it is willing to take less risk in case we decide to go long. If the market opens badly it will be triggered

Short ExtremeStop: goes up by a whole lot to 1434, pointing that it is willing to take some risk of being short

This alone would already tell us the there is somewhat more risk to the downside. But here comes DPTA to provide some more guidance on what to expect. First a short intro on how to read the chart. The chart provides the probability of a strong movement around the trend for the next few weeks. As you can see it always adds up to 100%. The colours represent how much danger we should expect: light and dark blue are good for those who think they should stay long. Orange and red have the opposite meaning. In between, representing low chances of change in the trend in force (whether upwards or downwards) we have green. 

So, reading all together: 1) expect some volatility typical of a narrow range-bound market  2) wait for a return of the SP to the 1400 zone in the first place and 3) after that  the risks are slightly biased to the downside, with a decent chance of breaking the 1390-1380 area. 

Conclusion:  Although there is not much to reap from a long position stay long with a stop in 1391 just in case. Its to early to strongly bet to the downside, but if the probabilities confirm it, in a week or two we will find an improved market setup to bet to the downside.


Note: more explanations about DTPA (Dynamic Technical Probability Assesment) and ExtremeStops will be available as we have time to write them up for you 
Note 2: Always keep in mind our disclaimer issued in our first post (31/03/2012)