The SPY seemingly had an upward break through it's bearish trajectory if we look at recent price action. Some may take this as a buy signal, but I still see reasons to be short...
1. We're barely above the 50d EMA. The 50d EMA is acting as resistance right now.
2. We spent a long time testing the 100d EMA. It was acting as strong support and we tested it three times before getting the recent "bullish" action. If we test it again, it's likely we'll break through the 100d EMA to the downside.
3. On my chart, I have the 21d EMA up. It is well-known in technical trading that price action will be attracted to the 21d EMA. In fact, it acts as a magnet and is almost always touched in pullbacks. Because of this, I don't think we've broken the bearish trending pattern yet... This is more likely than not just a slight pullback to the 21d EMA because as we can see, price action is literally on top of the 21d EMA. It's consolidating here and giving more power for more trendy bearish price action. Then, finally we can break the 100d EMA to the downside.
4. Because we're touching the 21d EMA and we're on a bearish trajectory, lots of investors will seek to sell their long positions here and buy short positions (because that's what many technical traders do at the 21d EMA). My guess is that we'll continue to see bearish patterns.
NOTE: If we break above $345 for the SPY, I'll officially consider it "Neutral"
1. We're barely above the 50d EMA. The 50d EMA is acting as resistance right now.
2. We spent a long time testing the 100d EMA. It was acting as strong support and we tested it three times before getting the recent "bullish" action. If we test it again, it's likely we'll break through the 100d EMA to the downside.
3. On my chart, I have the 21d EMA up. It is well-known in technical trading that price action will be attracted to the 21d EMA. In fact, it acts as a magnet and is almost always touched in pullbacks. Because of this, I don't think we've broken the bearish trending pattern yet... This is more likely than not just a slight pullback to the 21d EMA because as we can see, price action is literally on top of the 21d EMA. It's consolidating here and giving more power for more trendy bearish price action. Then, finally we can break the 100d EMA to the downside.
4. Because we're touching the 21d EMA and we're on a bearish trajectory, lots of investors will seek to sell their long positions here and buy short positions (because that's what many technical traders do at the 21d EMA). My guess is that we'll continue to see bearish patterns.
NOTE: If we break above $345 for the SPY, I'll officially consider it "Neutral"