Just looking at this chart, one year of weekly candles, I can point to 4 times when the market had a bad week and then continued higher after that week. There is some history to support anyone who is thinking this market could go higher from here. Even more compelling is that 3 of those times, the weekly candles came down to the $181.00 area and then rallied higher from there. I am not saying the market is going higher from here. I am saying it is possible.
Again, looking at this chart, I can see several things that point to a potentially lower market. I see moving averages pointing down. I see the 8 period moving average under the 21 period moving average. I see the possibility of the 21 period moving average going below the 50 period moving average. I see price currently within a lower range than it has been in over the last 9 months. I know the SPY hasn't seen the $181ish level since October. I also see the resistance the $212ish level presents to the market. It has touched that level 3 times since December and just can't seem to get through it. I am not saying the market is going lower from here. I am saying it is possible.
So now it's time to get educated and look inward for your decisions about your investments. I don't know about you but I like to be the one in control of my investments. I like to make the decisions. And I make it a point to learn from the bad ones. Look at charts, listen to others, put what you see and hear through your filter and make your own decisions. Investing isn't easy. Everyone is wrong several times (a week). If you lay out a trade that doesn't go the way you planned, get out of it quickly. Don't be that investor that says, "I'll just wait till it turns around". All the time you are waiting you were losing money. I would rather have cash under the matress than "wait till it turns". Why? Because when the trade turns around you can purchase even more shares because the price is better.
173.50 ish area - Long tail resistance and long tail support. What does "long tail" mean? When a candle has a long tail. Notice the shaded circles on the $173.50ish horizontal line. The line gets hit with the Long Tails of the candle. When the $173.50 ish area was support, it turned out to be support for the long term.
$181.00 ish area - Back in late 2013 and early 2014, this line got hit with candle bodies as resistance and support. In late 2014 and just this week, the line gets hit with long tails and the line is support. When the $181.00 ish area was support, it turned out to be support for months at a time.
$188.00 ish area - Back in early 2014, this line served as resistance for 10-12 weeks. In October 2014 and this week, the line was hit with candle bodies. It October it acted as support for months.
$198.50 ish area - This line was only resistance for about an 8 week period of time. After that it became support. This week the top of the candle stopped at the 198.50 ish area. Is that because the market is ready to go lower? Maybe the market just ran out of days in the week to keep going up. Let's see what next week brings.
Good luck to you. Trade What You See...
You should know I like to follow the market pretty closely. I almost always study the market before I go to bed. And a few hours every weekend is devoted to the market. Most people don't spend that kind of time. A longer term investor shouldn't worry so much about the ups and downs of the market. But I do believe they should make sure ( weekly or monthly) that a stock is following an uptrend line. If uptrend lines are broken then take some off the table and see what happens. There will probably be an opportunity to get back in at a lower price...
Thanks for the question. I hope this answer helps you trade what you see.