Will the FED be able to control inflation? Spy outlookSp500 ended the day continuing to form a bear flag. We are still in a bearish market.
I am short term bearish, short term bullish and long term bearish
First let me explain why I'm bearish next week then bullish.
There are a few reasons why i think the market will drop to around 3829.75 - 4016.75
The moving averages are color coded
Blue - Daily 200 MA
Purple - weekly 50 MA
Orange - Weekly 100 MA
Green - Weekly 200 MA
1st - on April 5th 2021, where the red rectangle is, there is a small gap we are probably going to fill before heading up
2nd - the trendline starting from February 5th 2018 is well respected. I see a bounce off the top of the trendline next week
3rd - the Daily 200 MA was rejected and found support at the weekly 50 MA. Bulls fought hard but support looks relatively weak.
4th - global events are spooking the market. Inflation/fed and rate hikes starting in March, tension between Ukraine and Russia.
Overall market doesn't look good. After the drop I expect a relief rally before the real drop comes.
A drop from the highs down to the bottom trendline is around 60% 1 year from now.
2007 drop was around 54%.
Previous corrections were around 30 to 50 %
This correction I'm expecting a bigger drop because of how overvalued the market is.
My trade plan:
buy Feb 21st and 28th calls and start building a long position when price gets to 4010 and shows confirmation of a reversal or bounce off the main trendline.
If we drop more to 3829.75 I would load up heavy on calls.
HOLD CALLS SHORT TERM ... I would sell and slowly build my put position as price hits the .382 .5 and .618 retracement level of the high to low swing from ATH.
Watch the .782 level as a close above this level on the daily chart will invalidate this idea..
I would put a stop loss above the .782 retracement
If you like my ideas make sure to like and follow!
