TMV Swing Trade report – short September  E-mini S&P  from 1176.75 – current price @ 1142.00 –

On August 15, 2011, I posted a blog that included a daily chart of the September S&P 500, with the August 16th reversal date marked as a possible pivot high and reversal point. I said the reversal date could mark the end of the corrective rebound and a trigger a continuation of the current downward trend.  The following day–the “trail”day– S&Ps traded above the reversal date high and closed lower than the opening price, setting up a swing trade signal to sell the S&P.  As you can see on the chart below, the reversal date did mark the end of a five-day corrective rally and triggered a sell signal at 1176.75, followed by sharp decline to 1128.25, before the market found any support.

This trade signal was identified with a strong understanding of market structure and market behavior. Market structure first came into play on August 9th, when the S&Ps were in a free fall and traders were trying to find any type of support. Looking to the left on the chart, you will see the market traded down to a previous level of demand, where the market had experienced a major trend shift.  This price level provided a target objective and support for the market to begin a rebound into the August 16th reversal date. A previous balance point occurred in the prior upward trend also provided resistance/target objective for the rebound, as the market rallied into the balance line, marked on the chart, and the projected reversal date. The convergence of the action/reaction signal pattern and projected price combined to trigger a sell signal before the market collapsed.

By John Crane

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September S&P - click to enlarge

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