SPY, ESBattle of the 20d SMA (blue line) is inevitable going into OPEX and even beyond.
The old adage of "Sell in May, Go away" has been in full effect since the week after April OPEX. Failure of the bulls to recapture the 20sma with two consecutive closes has contributed to the decline (one of many factors).
Again, price will be a combination of many things:
technicals (what we're pointing out)
liquidity
sentiment
fundamentals
macro
Fundamentals are starting to matter in an age where the FED is not providing endless liquidity anymore (QE).
They are actually decreasing liquidity (QT) and reducing balance sheet of assets.
So we know the big picture here.
The 20d sma is declining, but that does not mean price cannot quickly move upwards from here.
If anything, we can expect a game of chicken at the 20d sma (as jam croissant would say) - where bulls and bears alike are battling for control.
We are reaching a critical window here for bulls heading into OPEX. Supportive flows will help bulls IF they can get some kind of rally above the 20d sma on two consecutive closes. That will kick start bear rally #2.
If bulls cannot regain control and there are continued closes below the 20d sma by 05/27/22, then we may be in for more decline.
Even with the big picture in mind, counter-trend rallies will be brutal, taking out stops on both sides.
Be careful here in the short term friends.
Long term, as said - until FED pivots, nothing has changed macro wise. Trend is down until proven otherwise.
The 20d sma and price is just one piece of the puzzle.
Ultimately, price is truth and has to be respected though.
Levels are posted for supports.
For ES: 4040 --> 3980 --> 3850 --> 3720 --> 3640 --> 3500 per Wifey on Twitter. Give him a Follow @ WifeyAlpha.
Rough spy levels 404 --> 398 --> 385-383 --> 375-372 --> 365-363 --> 352-350.
Upside will be 4040 --> 4125 --> 4270 --> 4360 -->4410 --> 4500 on ES
404 --> 410 --> 425 --> 435 --> 440 --> 448-450 on SPY relatively
TLDR:
Bulls need to regain control of 20sma at levels posted above in the next couple weeks (ESPECIALLY week after OPEX). If not, big trouble and more decline incoming til June OPEX.
Best of luck traders.
