SPY, would like to see a pullback to the 400 level
SPY just seems like it has had a blow off the top strong 4 week push. I'm not bearish, but just waiting. Would like to see a pullback to the open gap at the 400 price level from early April. If we go sideways long enough I might change my mind. But if I do short at any time, and I HATE shorting the SPY, I will be full on long if we get to the 400 level.
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Nov 10 is a good candle to watch. A break below that candle is a great entry, so lets say 462 with a stop at the ATH (all time high) maybe 471. Then, if we get down to 453ish, move stop down to the top of Nov 10 candle. If we break below 450, move stop down to 455.
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Looked at hourly timeframe and you can see a super rare divergence with RSI and market. We will see how the market ends today and early tomorrow. These are the kinds of divergence you want to see for bearish trades.
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Add on apologies... RSI making a higher high with market making lower high.
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Gonna push a little higher and make a very clear EW5 since early Oct. But Wed's low is the line in the sand for now. I'll try to squeeze out a little more profits to the upside but I know it will be short lived.
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Yesterday's bullish buying was too strong to not go higher in the short term; so SPY will push to ATH. Who knows how long it will last but I'm still not super bullish. Market neutral strategies continue to be the play, potential into the new year.
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So with the bearishness we saw on Thursday and Friday, I wanted to re-analyze the SPY and ES futures this weekend. The ES did hit a new high Thursday morning, pre-market for the SPY; as you can see in the picture above. The blue line was the previous ATH and we broke that level. Technically we have completed a EW5 from early Oct and we have been in a EW5 for several weeks now on the longer trend from last year. That could be all she wrote, as the Fed is speeding up tapering and rate increases. I think people are going to start flooding out of high valuation stocks as they are going to be hardest hit, until they can figure out a better value for these companies. And this will lead to a bunch of profit taking in stocks. Looking for SPY to 400 over Q1 2022.
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Ok, bullish for now but with limited upside. It definitely makes a lot of sense for the SPY to go to 500, before having any kind of pull back. I'll show why that is later on; not relevant now. But be wise in your bullish trades as strong bullish trends that we have seen over the past 2 years are probably not likely.
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So the SPY broke out to an ATH at the end of Dec, but it didn't hold. I did by puts for protection to the downside 6 months, the day after it sold down from ATH. Tech has been leading the market lower, just check out the QQQ. When the SPY made a new high the QQQ did not. VIX also isn't increasing like it had the last time the SPY was in this range. Definitely time to be cautious on the market.
