February 2018 started off with a surprising drop in the major indexes (surprising to some, we actually caught two really nice short trades on SPY) and then last week we saw the biggest one-week gain since 2011.

What’s next?  Technical analysis shows that we are at a key decision point, here is what we are seeing:

The S&P 500 is right at a key Fibonacci retracement level and is sitting right in the middle of the Ichimoku Cloud.  I show this in detail in the video, and provide some more written commentary below.

If the S&P goes up above ~$2800 from the Friday, 2/16/18 close of $2732, then the probability is for new, all time highs.

If, however, the S&P closes down below ~$2700 with some momentum, then we are looking at another move down to between $2550 – $2400.

I do not know which way it will go, but I do know what to watch for and will be poised to capture great, high-potential, low-risk trades either way.

Two heavyweight retail companies; WMT ( Walmart) and HD (Home Depot) are reporting earnings before the open on Tuesday, 2/20/18 and whatever they have to say and, more importantly, how the market responds, could very well determine the overall market direction for the near term.  These two companies are huge in their own right and represent the overall health and outlook of a huge slice of the economy and market.

I’m not taking any new trades going into this new information entering the market, but will absolutely be watching closely and taking trades afterwards, based on the realities of what happens.  I have a handful of great trade candidates ready to go once things get clear.

We should expect volatility in the market to continue and be ready to seize opportunities quickly, but always managing risk very carefully.  If you “bet the farm,” you should be prepared to lose it.  I am not!

Trade safe, use risk control, keep the winners big and the losers small and I’ll catch you on the next update.