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S&P 500: A Low-Risk Short Shorting Opportunity Lurks Near 5100

Published 02/27/2024, 01:48 AM
Updated 07/09/2023, 06:31 AM

The S&P 500 slipped 0.4% Monday, following last week’s big run to record highs.S&P 500 Index-Daily Chart

Impressive earnings from market darling Nvidia Corporation (NASDAQ:NVDA) sent the index flying 105 points last Thursday, but so far, the index is struggling to add to those big gains in the follow-up sessions.

Too high, or not high enough? That’s the million-dollar question.

Both sides have compelling arguments. Few things are more powerful than momentum, and this rally is red-hot. But on the other side, all good things must come to an end and this rally is no different.

At this point, I give a very slight near-term edge to the bears. Not because I think this rally is topping but because savvy traders can enter a low-risk/high-reward short trade at current levels.

The market is pausing at 5,100, giving us a low-risk shorting opportunity with a stop near Friday’s intraday highs.

If momentum continues higher, we get stopped out for a small loss. On the other hand, a very vanilla pullback to 5k will produce profits of many multiples of that risk.

Low-risk, high-reward trades are what traders dream of, and here’s a good one.

Latest comments

Agree, will election year change things?
will bet a rise to 5400 and cut loss at 4900, 300up vs 200down.
low-risk? why bother for the 100pt drop? above 90% of the trading days are rising.
Bears we want you, welcome!
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