SPY - Tues/Wed Forecast
Hopefully you opened up a long position last Friday (see post linked below) or during the premarket trading session today. You would have got in at a good price and rode a massive bullish trend today. Based on closing price action, guessing most of you held on who did. Here's a look ahead this week:
The FinTwits are enraged by the price action today. Lots of fits about how this is a fake out and we'll capitulate tomorrow back to lower lows. None could specify exactly their reasons for believing this (lots of hunches; some said 'weak volume'), but I thought it worth re-examining the chart just to reaffirm my own perspective.
First, volume was really good today. If you compare reversal volume from the one highlighted a month prior, you can see similar price action, but with greater velocity, thanks to the slightly increased buying volume. I'm expecting price action to hit a wall and trend sideways (see ghost feed) on Tuesday, giving us a doji or other mixed signal candle, followed by a breakout on Wednesday. Again, in line with the last breakout. If prices manage to close a significant amount lower (<$387), I would be leaning towards lower lows.
A more optimistic outcome would have us break above prior resistance and potentially push to new ATH's, but I think the bears are going to attempt to turn it around and short heavy at $392-95. A strong close with elevated short interest would give us the rocket fuel we need to push higher.
VIX is continuing to cool off. Will add additional commentary late this evening/early tomorrow if futures/volatility show any signs of impending doom.
I setup 3 standard deviation Bollinger bands just in case price action sends us to the moon. If anyone observes anything I've not covered please mention it below. Cheers!
The FinTwits are enraged by the price action today. Lots of fits about how this is a fake out and we'll capitulate tomorrow back to lower lows. None could specify exactly their reasons for believing this (lots of hunches; some said 'weak volume'), but I thought it worth re-examining the chart just to reaffirm my own perspective.
First, volume was really good today. If you compare reversal volume from the one highlighted a month prior, you can see similar price action, but with greater velocity, thanks to the slightly increased buying volume. I'm expecting price action to hit a wall and trend sideways (see ghost feed) on Tuesday, giving us a doji or other mixed signal candle, followed by a breakout on Wednesday. Again, in line with the last breakout. If prices manage to close a significant amount lower (<$387), I would be leaning towards lower lows.
A more optimistic outcome would have us break above prior resistance and potentially push to new ATH's, but I think the bears are going to attempt to turn it around and short heavy at $392-95. A strong close with elevated short interest would give us the rocket fuel we need to push higher.
VIX is continuing to cool off. Will add additional commentary late this evening/early tomorrow if futures/volatility show any signs of impending doom.
I setup 3 standard deviation Bollinger bands just in case price action sends us to the moon. If anyone observes anything I've not covered please mention it below. Cheers!
Note
VIX is printing a megaphone pattern that looks to break up to 25 or in the next couple days. Today's price action is right in line with what was projected above. Here's a 15-m chart showing where we'd ideally like to close today's session. Notice how price action bounced right off of the lows for today for formed a nice tight real body with a long lower wick? For now, these higher prices are being accepted. Note
Nice little cup and handle to wrap up the trading session. If you're going to buy at these levels consider waiting until close when market forms the lows of the handle. Happy trading all: Note
There's the volatility uptick and megaphone I mentioned before. This is giving us the handle for our C&H (watch for it to fizzle out around 24): Note
See comments below for up-to-the hour thoughts. If you opened your position at $384 or greater, I'd be taking profits. I'm holding fast for now. We're inside a solid bull flag off of Fridays lows.Note
Can we go lower tomorrow? Yes, hourly chart shows a little more fall. It's rather curious why we didn't reach those lows at close today. That to me reveals underlying buyer strength. Note
Stealing this from PreferredStonk: >Todays factors contributing to the sell-off:
> China regulators saying that equities are in a bubble. (small impact)
> Uncertainty regarding further FED intervention into the bond market. (small impact)
> Yet another gamma squeeze provided by reddit. This time in a mortgage broker. (small impact)
> ADP payroll data giving a sneak peek of jobs data. (medium impact)
> FED Presidents triple-header 10am-2pm. (medium impact)
Bottom line I think this is a rotate-to-cash event in anticipation of key info. Expect more dips at open as money moves either to or from tech-based off of perspective job data available early tomorrow and texture throughout thanks to reaction to fed lineup. Expect bigger swings if bonds come up.
We could well revisit the 50 day ema on the daily tomorrow or Thursday, but I'll still be long, just less happy and might have to wait until next week with a news cycle dominated by stimulus passage.
Note
I'm holding fast. Please see all notes above and below. We could see a wall of selling @ $389 tomorrow. Otherwise, I'm expecting more than a few bears to be walking funny tomorrow.Note
Market rejected $389 in the premarket when volatility ramped up to 25. Megaphone pattern remains intact. Closed long. Shorting if we break below $385. We might remain inside this channel, or we might break down further. Note
SHORT @ $385Note
Target $381.64<END OF POST>
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.