Oscillator hit “overbought” zone about 2 weeks back.
So it pulled back to the key moving average (“short-term” MA) and been holding above it ever since.
SPY DAILY BARS
So, the market has been chopping in the last two weeks waiting for the oscillator to reset.
Why does this happen?
Well, the bulls are tired (“overbought”), they needed to rest. so the market has been consolidating in the last two weeks while the bulls are resting or digesting its gains.
THIS HAPPENED BEFORE:
- During Jan-2024, the market chopped sideways for 3-4 weeks before it resumed to the upside–it allowed the oscillator to reset a bit
- During June-2024, the market chopped sideways for about 2 weeks before it resumed to the upside–once again, it allowed the oscillator to reset a bit
- Here today, the market has been chopping for about 2 weeks now as the oscillator has been resetting a bit
As long as SPY can maintain holding above the key moving average, we could see the market resuming to the upside upon the oscillator cross confirmation.
However, if we lose the key moving average and if the oscillator gets a ‘full reset’ (all the way back down to the bottom of its band, so it must cross back up in the middle of the band—I explain in detail in this video), things could get very hectic.
