As you can see, SPY has been consolidating between 0.5 and 0.618 fib levels since mid-April. However, there are some bearish signs to be aware of:
this week we broke the uptrend (yellow line) that has been going since the beginning of April
we can see a double top pattern around the fib 0.618 level, which is extremely bearish and signals a reversal
we broke the RSI trendline as well
there's a MACD crossover which signals a change in direction (yellow box)
I think the trend reversal is a given and a matter of time. Are we revisiting the March lows? It's very hard to say. I'm keeping my eye on that blue line (trendline since 2016) as a potential buying opportunity, should it hold.
All that said, bears have been lacking the power to reverse this for a while. One great example is what happened on the 14th of May. There's a lot of manipulation too, with carefully orchestrated press conferences and interviews to prop up the market.
Stay focused, stay safe. Have a great weekend folks.
Great call. Do you see it testing the upper range around 2920 again?
carvil_
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@KCURCIO, It could very well do that given what we've seen in the last couple of days. That would create a triple top pattern and it would be yet another indication that prices will be falling soon. Keep an eye on the put/call ratio for SPY over the next few days to see if it rises significantly. But more importantly, we need to watch tech carefully. We've been rallying of the back of the 5 largest tech companies (20% ish of the index), without them we wouldn't be where we are right now. As soon as tech loses momentum, the downfall will begin. The banking sector is another indication that things are not well at all. Given that Berkshire just surprised investors by selling a lot of bank stocks, we could see an acceleration of this downfall. The market is not the economy, except it depends on it for earnings... I hope I'm wrong though.
KCURCIO
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@carvil_, Yeah the financials have been hammered. I'm thinking of entering short positions at 2900 depending on indicators. The fact that we broke through that 2790 area and the bears fumbled the ball is still pretty bullish for me, at least until we get to the upper range again.
carvil_
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@KCURCIO, By the looks of it (futures), Powell's interview went well :D that puts us in a position to re-test 0.618 fib level again soon
KCURCIO
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@carvil_, yeah I woke up and almost fell out of bed seeing futures after Moderna news lol