#SPY as clean as they get for a shorting level on S&P500
I did a clean chart on SPY as my original chart was quite cluttered but I think this gives a very clear view and why I thought this recent move higher into resistance was a very shortable area. There are 3 very important inflection points which 9 out of 10 times were going to get a reaction. These all come into play between 402-410 on the SPY
1) Orange line which is the anchored vwap since the markets all time high i.e most market participants that have bought the market on average since all time highs (since the start of the year) would average somewhere around here, which means that in a market that has trended towards the downside, you would generally have more uncomfortable buyers who have been on the wrong side of the market, dying to sell somewhere close to their 'average price'. An increase in supply would generally see a reaction by the market
2) The 200dma is nothing new in technical analysis and this is exactly where we saw a reaction in Mid-August which led to a sell off of almost 20%. The down trending 200dma is some history for the bears and would likely act as some anchor point on this strong move higher.
3) The downtrend resistance from all time highs has held price lower since the highs we saw right at the beginning of the year. Another important inflection point and this is the 4th attempt to break it which has failed for now.
Putting all the above in order, there is no doubt that this area would provide some pretty strong resistance. Could we get above? Possibly.. but the probability favoured a downside reaction from here and until price shows us something different, I would favour shorting the SPY above 400
Happy trading!
1) Orange line which is the anchored vwap since the markets all time high i.e most market participants that have bought the market on average since all time highs (since the start of the year) would average somewhere around here, which means that in a market that has trended towards the downside, you would generally have more uncomfortable buyers who have been on the wrong side of the market, dying to sell somewhere close to their 'average price'. An increase in supply would generally see a reaction by the market
2) The 200dma is nothing new in technical analysis and this is exactly where we saw a reaction in Mid-August which led to a sell off of almost 20%. The down trending 200dma is some history for the bears and would likely act as some anchor point on this strong move higher.
3) The downtrend resistance from all time highs has held price lower since the highs we saw right at the beginning of the year. Another important inflection point and this is the 4th attempt to break it which has failed for now.
Putting all the above in order, there is no doubt that this area would provide some pretty strong resistance. Could we get above? Possibly.. but the probability favoured a downside reaction from here and until price shows us something different, I would favour shorting the SPY above 400
Happy trading!
"If you do what you love, you'll never work a day in your life" - Marc Anthony