Market Analysis: Bearish outlook continues - 2/25/2020

Today we saw continued weakness in SPY after yesterday's gap down and consolidation move. SPY closed today at Low of Day (LOD) meaning sellers are still in control coming into tomorrow. I believe more downside is still possible as the RSI on the Daily Timeframe is not yet oversold. I've noticed a lot of people attempting to look for bottoms this morning, however I would not be a buyer anytime soon nor would I be interested in catching the inevitable bounce. My plan is to let the market find the bottom, then get in when the dust settles. This means when the trend reverses with higher high/higher lows, a blow off bottom, or price holds above a rising 5DMA. These are all clues that a bottom has been made.

I am current short this market. The current market is not in bear market territory yet therefore any short trades should be kept short-term with tight stops. I believe overall picture is still bullish above a rising 200DMA. The current dip has expended too much energy too fast and is looking similar to January 2018. I am expecting a bounce in the market this week where I plan to cover any remaining shorts.

Comment:

IWM lead the market in terms of downside momentum. Failed perfectly at the anchored VWAP from the October lows and is now riding the 200DMA. A break below this important daily moving average will be obvious bearish signs, however I believe the more likely scenario is that IWM consolidates here and bounces to around 160s to retest the anchored VWAP area.

Comment:

QQQ continues it's bearish price action as it broke below the 50DMA after holding it yesterday. QQQ is currently still leading the market in terms of % performance and is still very extended above it's rising 200DMA. The next important level to note is the Anchored VWAP from the October lows at 211.

Comment:

Overall, I would not be a buyer in this market just yet. Although the decline has been too steep and a bounce seems inevitable, there is no significant signs yet that the downside is over. All indexes have closed LOD meaning sellers are still in control and selling is likely to continue tomorrow morning.

This is my first market analysis idea on TradingView. My goal is to keep a record of my ideas to look back at when I gauge my performance. Let me know where you believe the market is headed or if you have any differing opinions.