SPY: SMA's, FIBS, end of QE, & rate hikes = The Perfect Storm
No need to be alarmed from the title if you have been following me, because you know where we are headed over the next few weeks. This week I expect selling to continue, but at an accelerated pace through Wednesday because of two things: 1.) SMA "death cross" of the 50 and 200 dma and 2.) We are currently in wave 3 of intermediate wave 3 of EW.
The "death cross" is the most notable indicator to pay attention to at the moment, because, historically speaking, the moment the 50 dma crosses below the 200 dma there is a lot of panic selling. I expect this week to be very red with a SPY target of 396-391 which is the 1.618 fib retracement level. SPY is also sitting on support from a trend line established in June of 2020. SPY failed to break below this support on Feb. 24, but I believe we break below it this time for the official break of the uptrend that began from COVID bottoms of 2020. This will also confirm my wave count and will be looking at going long at the end of this month for intermediate wave 2 up.
Powell is set to potentially announce the FED's first rate hike since the COVID crash, so I'm sure we will see a lot of news headlines this week stating that the sell-off was in anticipation of Powell's announcement. I always chuckle when news comes out about why the market is tanking or setting ATH's because in the end news never drives the markets. There was a quote from Jason Bonder of Brownstone Research in an article he published that said "Not only does the news media kick up the hornets’ nest whenever it can, it’s often just flat-out wrong." If anyone was paying attention to the news when the markets were on a tear upward after the COVID bottom you'd remember news headlines saying things like "the market is shrugging off disappointing jobs reports" or "market tanks after new COVID strain discovered". So remember that this week when the market sells off and news headlines try to persuade their audiences as to why it's happening.
Lastly, there will be a buying opportunity on this dip, so look to go long perhaps towards the end of March. The rip upwards should reward those who are most patient.
Not financial advice.
The "death cross" is the most notable indicator to pay attention to at the moment, because, historically speaking, the moment the 50 dma crosses below the 200 dma there is a lot of panic selling. I expect this week to be very red with a SPY target of 396-391 which is the 1.618 fib retracement level. SPY is also sitting on support from a trend line established in June of 2020. SPY failed to break below this support on Feb. 24, but I believe we break below it this time for the official break of the uptrend that began from COVID bottoms of 2020. This will also confirm my wave count and will be looking at going long at the end of this month for intermediate wave 2 up.
Powell is set to potentially announce the FED's first rate hike since the COVID crash, so I'm sure we will see a lot of news headlines this week stating that the sell-off was in anticipation of Powell's announcement. I always chuckle when news comes out about why the market is tanking or setting ATH's because in the end news never drives the markets. There was a quote from Jason Bonder of Brownstone Research in an article he published that said "Not only does the news media kick up the hornets’ nest whenever it can, it’s often just flat-out wrong." If anyone was paying attention to the news when the markets were on a tear upward after the COVID bottom you'd remember news headlines saying things like "the market is shrugging off disappointing jobs reports" or "market tanks after new COVID strain discovered". So remember that this week when the market sells off and news headlines try to persuade their audiences as to why it's happening.
Lastly, there will be a buying opportunity on this dip, so look to go long perhaps towards the end of March. The rip upwards should reward those who are most patient.
Not financial advice.
Gap fill at $400