I have been getting questions on why I think 0.38 fib level ( 265) is important and why I think the market may reverse from here. Most of you know I rely on Fibonacci levels for plotting supports and resistances in my charts. I also incorporate Elliot waves in my market analysis to study current price trends and predict future price trends. In my chart, you can see we started the downtrend at 339 and we went through 5 waves in the direction of trend ( impulse) to the bottom of the trend at 218. Spy broke the downtrend at 235 and at that point, I knew that the impulse wave was over and we had to go through corrective wave. i.e. retracement to one of the above fib levels before the market can take the next leg down. Most traders and analysts thought that the market would pull back after retracing back to 0.23 fib level ( 247) but we ended up going straight to 260 where it got rejected ( This is the end of corrective wave A). SPY pulled back to 247 fib level( corrective wave B) and chopped in range for days before it finally completed the corrective wave 3 at 0.38 fib level at 265 today marking the end of corrective wave. The corrective waves ABC looks flat i.e. moving sideways ( flat formation) which is a sign of the start of new impulse trend. You can argue and tell me that corrective wave C may end at 279 ( 0.50 fib level retracement) but you may have noticed, corrective waves usually form slowly( it took 9 days for spy move from 0.23 to 0.38 fib level) so it is highly unlikely we complete 0.50 retracement right away from 265. Also, there is no fundamental catalyst for the markets to take the next leg up (no good news on the vaccine, oil, decline in the number of cases/deaths globally, people returning back to work, businesses opening again, global supply chains back online again, etc.) Again, I could be very wrong and the market could very well make that "V" shape recovery back to 320+ so we will have to wait and see what happens. In the end, price action is king.