SPX is >2% above ATH after a Friday rally the author deems based on unreliable catalysts, creating overextended conditions that historically see brief pullbacks. The author believes negative geopolitical news over the weekend will act as a catalyst to trigger the anticipated technical pullback at the market open on Monday. A short-term short position on the SPY is implied to capitalize on a predicted Monday sell-off. The market's continued "irrational" behavior could ignore negative news; conflicting stories could be resolved positively; a "last minute tweet" or other intervention could spark another rally.
SPX is >2% above ATH after a Friday rally the author deems based on unreliable catalysts, creating overextended conditions that historically see brief pullbacks. The author believes negative geopolitical news over the weekend will act as a catalyst to trigger the anticipated technical pullback at the market open on Monday. A short-term short position on the SPY is implied to capitalize on a predicted Monday sell-off. The market's continued "irrational" behavior could ignore negative news; conflicting stories could be resolved positively; a "last minute tweet" or other intervention could spark another rally.