IdanKoren
Long

SPY Triangle vs Crash (Why you can't be bearish yet)

AMEX:SPY   SPDR S&P 500
I have read many posts about the bears predicting that late Jan's top on the SPY             was a blow off top and that we are going lower.

That may be right, but blow of tops can also create triangle consolidation formations for a wave higher. Remember that this market is being held by strong fundamentals and liquidity still and that a bubble in equities can go much higher than most would logically predict. And we are in full start of the earnings season, which will beat on guidance most likely.

On the hourly charts we still see an inverse head and shoulders with the head of the pattern forming a higher low than the previous Feb low. Friday's action was at first bearish as we opened above the neckline of the Inverse H&S but then failed below it... up until the last 20 minutes when the bulls took the price right back up to the neckline again. Putting this in context that on daily $SPY you can see that we tested both the 20 and 50 SMA at the same time and that we closed high enough to not completely engulf the body of the previous candle, gives you context that we might breakout of it the next time we do test them again in hopes to get up to the top of the triangle. If we continue our move down from here though, it is likely that we crash as there isn't a lot more support down below until most of the stocks hit their 200SMAs but until then I'm bullish short term.



Bulls should consider lightening up on their positions as we get closer to $275. A fail to reach the $274.80-$275 level before starting to form topping 60min candle patterns will be relatively bearish.
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agree with your analysis that it is too early to go short. that said Monday and Tuesday are going to give a indication of direction. like the price action Friday where it went higher then the last 14 bars
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