So today we got a bounce from the deluge of selling on Friday which honestly is to be expected barring any catastrophic news. Part of these big moves back and forth is to suck in buyers and sellers, trap them, and then shake them out. Today was another one of those days. They gap the market higher, get a bunch of shorts to cover, suck in a bunch of longs, and slowly fade those candles into close. They're washing out the retail traders, it's a chop shop.
BUT - on the daily we did gap up conveniently right into trend line support and made a run at the last breakdown candle high only to hit the .5 fib and retrace running into the multiple zones of what is now resistance closing below the $324.50 zone that was a gap fill. That is inherently bearish. If we break the trend line we're currently parked on that sends us back down to the 50 period MA around $321 and i wouldn't expect it to hold much longer after that. I'm revising my downwards price target to the bottom of gap @ $317.25 and into the $315 area where we had a breakout area. We'll most likely meander around this area for a few more days creating a bear flag/consolidation for the next leg lower. This is more pronounced on the futures contracts (/ES). and that brings me to my next point.
There is a BULLISH divergence on the RSI on all TF's up until the daily that coincides with an ascending wedge.(been a while since i've drawn any type of downtrend line on SPY). I wouldn't be surprised to see another run at the $328-$329 area i have marked on the hourly chart i'm linking. But keep in mind we also closed below trendline support on the hourly.
Ultimately, if things continue on the path we're on i think we could see price dig into the $309-$312 area where i think a lot of big money either added to or opened new positions in the last "pullback" we had. That would be a decline of about 6-7% from the highs.
Note IWM did show more relative strength today as opposed to SPY but also closed just barely below the resistance line i have drawn by a few pennies. This was the top of a gap/break up area. All together IWM has shown to be a leading indicator for the larger indices. But also note that IWM barely hit it's 90 day average volume today as well.
If SPX breaks the uptrend line which looks a little different i'd expect a break of 3200 going into the break out area around 3141.
Watch for fakeouts in both directions. Bogey on the upside was Friday's breakdown candle high @ $327.17. If we close above there, even hourly expect another run at the highs from last Wednesday ($328.28) and even another run at the ATH's. Remember, it's the markets job to take money from you, not have you make money.
I'm currently net short with a whole bunch of VIX puts as a hedge (they're stupid cheap right now BTW).
This is not trading advice. This is my own personal opinion based on my own technical analysis.
BUT - on the daily we did gap up conveniently right into trend line support and made a run at the last breakdown candle high only to hit the .5 fib and retrace running into the multiple zones of what is now resistance closing below the $324.50 zone that was a gap fill. That is inherently bearish. If we break the trend line we're currently parked on that sends us back down to the 50 period MA around $321 and i wouldn't expect it to hold much longer after that. I'm revising my downwards price target to the bottom of gap @ $317.25 and into the $315 area where we had a breakout area. We'll most likely meander around this area for a few more days creating a bear flag/consolidation for the next leg lower. This is more pronounced on the futures contracts (/ES). and that brings me to my next point.
There is a BULLISH divergence on the RSI on all TF's up until the daily that coincides with an ascending wedge.(been a while since i've drawn any type of downtrend line on SPY). I wouldn't be surprised to see another run at the $328-$329 area i have marked on the hourly chart i'm linking. But keep in mind we also closed below trendline support on the hourly.
Ultimately, if things continue on the path we're on i think we could see price dig into the $309-$312 area where i think a lot of big money either added to or opened new positions in the last "pullback" we had. That would be a decline of about 6-7% from the highs.
Note IWM did show more relative strength today as opposed to SPY but also closed just barely below the resistance line i have drawn by a few pennies. This was the top of a gap/break up area. All together IWM has shown to be a leading indicator for the larger indices. But also note that IWM barely hit it's 90 day average volume today as well.
If SPX breaks the uptrend line which looks a little different i'd expect a break of 3200 going into the break out area around 3141.
Watch for fakeouts in both directions. Bogey on the upside was Friday's breakdown candle high @ $327.17. If we close above there, even hourly expect another run at the highs from last Wednesday ($328.28) and even another run at the ATH's. Remember, it's the markets job to take money from you, not have you make money.
I'm currently net short with a whole bunch of VIX puts as a hedge (they're stupid cheap right now BTW).
This is not trading advice. This is my own personal opinion based on my own technical analysis.
