Moving Average
S&P 500 is down -1.28% (biggest down day this year) today, as, finally, we’ve lost 20EMA to the downside which I’ve been talking about all through out this year. This means minor-term sentiment has now turned to bearish. However I don’t believe this is the end of the bull rally, but rather, a pullback within an uptrend before resuming that uptrend.
Currently “50EMA” is residing at 232.94, and that’s the level we might see some short-term bounce. If we do get back up we may retest 236.50ish, but if we continue lower, next level of support is the gap area.
Gap Area
Buyers may be eyeing on that 232-231ish gap-fill area as next level of support. This is the support level I do think we may see some significant dip buyers coming in.
Fibs
When technicals coincide/overlap with each other, I always pay attention. First, we can see that 38.2% level is exactly where we stopped selling today, so that would be the level to watch tomorrow at 233.70ish. Also, 50% fib retracement level is coinciding with first “Gap Open” area, while 61.8% retracement level is also coinciding with second “Gap Open” area. These are the levels I will be preparing to buy the dip once again on SPY. I think the worst case scenario for this pullback is 230ish, between 231-230, I think we will see much buyers show up.
2013 VS 2017
Past price-action comparison-analysis can be useful when attempting to understand market’s psychological behavior as you can see from my last article on 1/31/2017 right before SPY moved 6% to the upside. Here, today, we have very similar action to “2013 March,” where the price broke below the 20EMA but found support at “50EMA” vicinity. I think, in the next several days, if we do see a bounce here near the “50EMA,” its definitely a level to pay attention to for the next big support.
Final Thoughts
When you see a pullback like today within an intermediate-term uptrend, rather than panicking, I would look for opportunities. That’s exactly what I did today as I went through my Watch List and found setups that I could buy the dip on this weakness. As of today, I am not sure exactly when/where we are going to see a bounce, but as I have depicted potential levels on this post, I think you can able to use those levels for your reference point as I will be watching the levels closely this week as well.
As of today, I am calmly holding all of my long positions including INTC C IWM
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16 thoughts on “SPY: The Next Big Support”
Thanks for that timely advise
The best of ST & Twitter, awesome work!
Hi Kay,
Looking forward to joining you on your entry into $SPY. My question is, if it falls through to the Fib levels you posted, then it falls through the 50 EMA obviously, but then kind of stops in “midair” at the 50% and 61.8% levels. Wouldn’t a better downside target be the 228-ish level, where price traded in a range and thus “proved that level”? Seems like more solid ground and support, and it also will probably coincide with the 100 SMA on the daily chart by the time it gets there. Thoughts?
yea 228 might give you a better support, but we may or may not get there..
If you could elaborate further, do you think this bounce off the 50 EMA was the level to enter into $SPY, or do we have a little further to fall, such as the 230-231 area you spoke of? Did you enter in at this 234 level, off the 50 MA bounce?
I know you mainly trade off technicals, but I wanted to ask about how the healthcare vote may affect the markets. It seems more and more likely that the House is going to pass the bill (on to the Senate). So, the market may rise a bit, probably tomorrow (if the House gets around to voting on the bill later today). Do you think that overall, the pullback is not really finished, and the probable rise in the markets is a shortable bounce? Even if it rises to 236-ish, it may still fall back to 230-231, right?
no one has the crystal ball, i only follow the price.
Looks like shorts are getting nervous here last few days =P
Bounce so far look a lot like 2013 March, Kay! – still need confirmation tho
Looks like we may retest gap area? weak close today on S&P
Based on this past few days price action on $SPY, it seems that SPY is either consolidating to find its footing at the 50 EMA (which it bounced off of couple times), or digesting the down move on Tuesday before falling further (to the 50% or 61.8% levels you mentioned in your post). Is there enough of a pattern to tell you what is happening here at this point?
For what it’s worth, it “feels” like it could go down some more – if you look at the weekly and monthly chart, $SPY could come down to 230-231 as you mentioned, and it would not only be normal, but I think quite healthy for the uptrend.
On the weekly chart, SPY closed below the 8 EMA, and 20 MA is rising to meet 230 I think by next week. The SPY pulling back to 230 in the next couple of weeks to meet, and then bounce off the 20 MA on the weekly would still keep the uptrend in tact.
On the monthly chart, a pullback to 230 would hardly touch the projected 5 EMA in April!
I think the people are so used to the markets just rising for the past 5 months that a 3-4% drop feels a lot worse than it actually is. Thoughts?
https://2tradersclub.com/2017/03/24/video-market-update-3242017/
It seems as though $SPY has successfully retested the 50 EMA support, on to retest the 20 EMA/DMA above. Also, the Stochastics you pointed out in the video on Friday proved out (so far) to provide a good early entry for $SPY on Monday, with follow through today (Tuesday). In fact Monday seemed to play out like how you mentioned in the video, where bears were trapped in the early morning weakness. What are your thoughts so far? You mentioned above that you were watching these levels (50% retracement) to buy into, so have we turned the corner now?
I think so..
K,
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