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December 20 Chart of the Day - ProShares UltraPro Short S&P 500

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ProShares UltraPro Short S&P 500 (SPXU) seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the S&P 500.

Needless to say, from a price action technical analysis perspective the monthly chart looks like a "flat liner" given that many indices and equities are trading at or near their al time highs (ATH).

But we all should know and agree that the only thing guaranteed in the markets is that they cycle. They cycle up and they cycle down across all time frames.

With that in mind we moved down to the weekly chart to see if there was any structure and found that not only was price repeatedly making new all time lows week and week, day after day that the outlook looked pretty bleak.

Bleak with the exception of a single weekly trend line that price could potentially respond to.

We had created a trade plan earlier this week whereby if/when price were to hit that trend line that we would begin scaling into a position.  So when price hit that trend line earlier today we opened a long position.

Keep in mind, we don't predict market tops or bottoms but from a longer term perspective we anticipate where price could go knowing that all markets cycle.

So in some ways it didn't really surprise us to see the S&P 500 drop like it did this afternoon.  Where it goes nobody knows for sure...

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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