[SPY Short to 240] The Bull isn't Dead he just Needs a Break
Ahoy mates!
From a long term oriented view the S&P seems to have confirmed the start of a downtrend with pretty significant selling volume . We have cleared the 14 EMA support and it looks like we are headed to test the 50 EMA that is currently sitting on 236.12 for SPY . The EMA is definitely trending near the 24% fib pullback line of 240, 2400 would give the S&P solid footing to continue a run or at least a small rally in 2019.
The 236 – 240 range for the market will be vital, this is where we have a trendline (Dashed white line) that goes all the way back to 2009 with wicks down tapping this support in 2011 and 2016. This trendline marks the very bottom of the market to the breakdown in 2011 that crushed the 50 and 100 EMAs but found support at the 200 EMA , our second point of support in the longterm upwards trend. Again in 2016 the market faltered, finding support at the 50 EMA , another point of support for this trend.
Currently that trendline sits below the 50 EMA , so if we break 240 and then 236, we could at least hope for a bounce on that trendline between 225 and 230.
If SPY cruises past 2400 and doesn’t bounce in 2300 2250, it is more likely than not that we would test high 2000s for a 38% pullback to the 100 EMA .
Now that’s worse case scenario. More likely is we have a full 24% back, maybe hit the 50 EMA and bounce up again before we retest that white trendline in mid 2019, early 2020.
Another indicator I’m watching is RSI , in 2011 at around the 45 RSI mark we saw the S&P recover, in 2016 it bounced back around 48-49 RSI . We’re at an RSI of about 49.5 on the monthly right now, which means we could easily go as far as 240 before repeating 2011 as many are saying.
I think we have a lot to look out for here in how bad this could get, the indicators really speak for themselves on this chart.
Either way, I'm short to 240, then seeing where we go from there.
**This is not advice to buy or sell, what you do with your money is your responsibility.**
Happy trading
From a long term oriented view the S&P seems to have confirmed the start of a downtrend with pretty significant selling volume . We have cleared the 14 EMA support and it looks like we are headed to test the 50 EMA that is currently sitting on 236.12 for SPY . The EMA is definitely trending near the 24% fib pullback line of 240, 2400 would give the S&P solid footing to continue a run or at least a small rally in 2019.
The 236 – 240 range for the market will be vital, this is where we have a trendline (Dashed white line) that goes all the way back to 2009 with wicks down tapping this support in 2011 and 2016. This trendline marks the very bottom of the market to the breakdown in 2011 that crushed the 50 and 100 EMAs but found support at the 200 EMA , our second point of support in the longterm upwards trend. Again in 2016 the market faltered, finding support at the 50 EMA , another point of support for this trend.
Currently that trendline sits below the 50 EMA , so if we break 240 and then 236, we could at least hope for a bounce on that trendline between 225 and 230.
If SPY cruises past 2400 and doesn’t bounce in 2300 2250, it is more likely than not that we would test high 2000s for a 38% pullback to the 100 EMA .
Now that’s worse case scenario. More likely is we have a full 24% back, maybe hit the 50 EMA and bounce up again before we retest that white trendline in mid 2019, early 2020.
Another indicator I’m watching is RSI , in 2011 at around the 45 RSI mark we saw the S&P recover, in 2016 it bounced back around 48-49 RSI . We’re at an RSI of about 49.5 on the monthly right now, which means we could easily go as far as 240 before repeating 2011 as many are saying.
I think we have a lot to look out for here in how bad this could get, the indicators really speak for themselves on this chart.
Either way, I'm short to 240, then seeing where we go from there.
**This is not advice to buy or sell, what you do with your money is your responsibility.**
Happy trading
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