Steversteves

Predictably Expected

Short
AMEX:SPY   SPDR S&P 500 ETF TRUST
Haven't posted in a while, not really feeling it these days. Market has been a mess but if you remember my last post I was a little on the bullish , long biased side because of the vast oversoldness of SPY . SPY was essentially resting at -3 SDs away and it was just too much for SPY to go down aggressively from there.

We had this clash of fundamentals vs technicals. Technicals kept SPY from selling off and fundamentals really prevented any real rally from developing.

We ended up getting a slight bounce but really not the aggressive bounce that would generally follow this deep type of oversold.

Enter NVDA . I was tempted to short SPY at market close today, but I figured NVDA earnings would be the catalyst the market was looking for to give us that bounce and voila. We have it. We are actually now bouncing.

I anticipate this to go green. Math projections are actually very positive for tomorrow, favoring the bullish side.

Statistical targets are a bullish break over 400 and a bearish break under 393 (exact prices are listed in the indicator on the chart).

We are forming a diamond bottom type pattern. Meaning we can go up a little bit but we are def going to come down. Even if it decides to break out to the upside, it will likely see an aggressive rejection back down.

I re ran time series modelling to see like, what the revised targets are. If you remember my post about timelines and targets, at the time SAS was mapping SPY as being roughly immersed in the 300s by 6 weeks out. We are now at 3 weeks and re-running with current data places the next target at 371 within the next 2 weeks, with an actual range between 371 and 410 currently.

But also, this little run here was so expected. Too many people shorting this and the market wants to remind you who is in charge. Myself included (I bought UVXY today, avg price 15.10 and may end up actually seeing a loss tomorrow on this tomorrow if my AM volatility thesis does not prove to be true). But I noticed no Monday my broker actually changed the short selling requirement for SPY , meaning that people are short selling this like NUTS, so the market is definitely wanting to shake up some people and make some people feel a little bit of pain and punishment for profiting off of its Titanic like demise.


But rest assured, this will tank. I put my faith in the math and the chart and both are saying this is going down.

However, just on a side note, I wouldn't really expect to see SPY sell off mid day tomorrow. For the sole reason that, for SPY to be brought outside of its deep oversoldness, it really needs a nice bullish close. So personally, I wouldn't count on seeing a dramatic sell off starting tomorrow, I would expect to see it going into the long weekend (i. e. on Friday). But that's just my thought, because despite these little bull runs SPY has, they aren't enough to really stabilize SPY unless we see a stronger close. We are actually making progress getting it out of the oversold area, we went from almost -3 to around -2. If we get a strong close tomorrow we could even see the -1s and that would be my que to re-enter short for a swing.

I am banking on volatility tomorrow (which is why I bought UVXY instead of SPXS ) but not on any dramatic selling, just based on math and oversoldness.

However, if this does sell off, then I would be equally as happy.

Trade safe everyone! Let me know your thoughts, questions or critiques below!
Comment: Hmm, seems like I was correct, again. :O
Shocking.

Not but seriously, very expected day.
Maybe I will do another post about tomorrow or maybe just share my thoughts here. Haven't decided. But I am waiting for futures to open to run some sentiment analyses on SPY.

Judging by the weakness we observed towards the end of the day, I would say, ya'll know where this is going. BUT, I think we need to tread cautiously.

I am going to be honest, the chart does not give any clear indications of trajectory. There is no pattern or logic to what I am currently seeing. My predictions for today were 100% math based because the chart is such a mess. But I am going to sit down and look at the chart and at the numbers and see if I can figure out what is up and what to expect for tomorrow.

I will run some numbers and perhaps do an update.

I hope you all had a great trading day and are looking forward to your long weekend ahead!
Comment: So projections are neutral but you know what? We are actually in a recession now officially and this may be announced tomorrow (GDP results already released which is how we know). I anticipate this to be addressed hopefully, if it is, well, we likely will see some over reaction.

Be safe tomorrow everyone!
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