ATHs next week?
LOL! Gotacha! Made ya click ;).
Posting this now as I will be gone for a bit on holidays and hopefully taking a break from this nightmare market.
This is also a pretty straight forward post, there really is no more trickery or guesswork anymore.
Recap:
- SPY broke down out of that channel/consolidation thing. I would still call it a failed pigeon pattern but ex-post-facto looked kind of head and shouldersy.
- SPY did not make 420s, obviously. That means SPY is still riding hard in the - 2 SDs range and re-approaching -3 SDs
- RSI is oversold on the bigger timeframes and approaching the lower range on the daily.
What to Expect:
Look at the chart, its pretty straight forward. But here are the key take aways:
- We will be testing the 370s shortly. Remember I posted about 2 weeks ago that time series put 370s on the target for about 2.5 weeks. This did not change going into last week which made the target to 1.5 ish weeks, and so next week marks the 0.5 mark. Obviously time series is not perfect so we could very well see the 370s before 0.5 mark is up. I anticipate seeing this probably sooner rather than later.
- The 370s corresponds to descending support on the chart from a chart pattern/TA perspective. I have highlighted the target range with the green circle.
- Any bounces will be minimal. Do not expect a hard, oversold bounce. The only thing that changes this is if SPY continues to tank into Monday and Tuesday and brings itself down below -3.5 SDs to -4 SDs. That would lead to a reflexive huge bounce that would bring us back up to the 415s very quickly.
- Lots of comparisons are being made to 2008. However, running some numbers yesterday, I think 2018 is a more appropriate projection. Look on the weekly chart between October and December 2018 on the weekly below:
You can see its almost identical to the weekly here. This happened because, like now, SPY was riding hard SDs away from its mean, roughly - 2 SDs. That like almost 3 months of consolidation served to stabilize the SD variance and then permit SPY to sell off further. This is what I am anticipating here. And this is why I am not anticipating a huge bounce, because SPY has shown it has no interest in testing 420s, so the only other way for it stabilize itself for continued selling is a prolonged period of choppy movement that seems predominately range bound.
- Remember FOMC meeting and announcement this week. More bad news, etc. etc.
So 420s off the table?
Yup, pretty much. Unless SPY tanks down below 370 and closes down there, which would trigger massive rebound buying and bounce, we can pretty much kiss 420s goodbye. And even if that happened, I think it would be capped at 415.
Bullish / Bearish Breaks & Trading Range:
You really don't need them. The chart couldn't be clearer. This is actually swing worthy and I DO NOT SWING! But this is a very convincing setup here to short down to the 70s.
But if you insist, the predicted trading range for next week is:
375 - 400
Hard Buy Area:
Hard buy area is a drop to or below around 375. This would be MUCH lower than -3 SDs and I would anticipate a major bounce. I am not swinging anything currently, but will be buying at those levels for a bounce.
Words of Wisdom
- Unless we drop to or below, I would say 375 - 376, don't swing long. Seriously, swinging long is diminishing returns here. Its far too risky currently and in this market to keep any open long position, IMO. The volatility and everything is just insane and you will be losing more than you are gaining.
- Identify your biases! I was obnoxiously long biased this week for whatever reason. Despite the fact that we were approaching that time series target. But my thinking was just we needed to see 420 before hitting that time series target and didn't consider this could tank, like in 2018, and just do a consolidation period to stabilize SD. I figured we just pop to 420 and then SPY can tank in 2 to 3 days down to that target and still fall within the predicted timeline. But alas, I was wrong haha.
That's it!
Hope this is helpful.
Feel free to leave your questions/comments and critiques below!
Posting this now as I will be gone for a bit on holidays and hopefully taking a break from this nightmare market.
This is also a pretty straight forward post, there really is no more trickery or guesswork anymore.
Recap:
- SPY broke down out of that channel/consolidation thing. I would still call it a failed pigeon pattern but ex-post-facto looked kind of head and shouldersy.
- SPY did not make 420s, obviously. That means SPY is still riding hard in the - 2 SDs range and re-approaching -3 SDs
- RSI is oversold on the bigger timeframes and approaching the lower range on the daily.
What to Expect:
Look at the chart, its pretty straight forward. But here are the key take aways:
- We will be testing the 370s shortly. Remember I posted about 2 weeks ago that time series put 370s on the target for about 2.5 weeks. This did not change going into last week which made the target to 1.5 ish weeks, and so next week marks the 0.5 mark. Obviously time series is not perfect so we could very well see the 370s before 0.5 mark is up. I anticipate seeing this probably sooner rather than later.
- The 370s corresponds to descending support on the chart from a chart pattern/TA perspective. I have highlighted the target range with the green circle.
- Any bounces will be minimal. Do not expect a hard, oversold bounce. The only thing that changes this is if SPY continues to tank into Monday and Tuesday and brings itself down below -3.5 SDs to -4 SDs. That would lead to a reflexive huge bounce that would bring us back up to the 415s very quickly.
- Lots of comparisons are being made to 2008. However, running some numbers yesterday, I think 2018 is a more appropriate projection. Look on the weekly chart between October and December 2018 on the weekly below:
You can see its almost identical to the weekly here. This happened because, like now, SPY was riding hard SDs away from its mean, roughly - 2 SDs. That like almost 3 months of consolidation served to stabilize the SD variance and then permit SPY to sell off further. This is what I am anticipating here. And this is why I am not anticipating a huge bounce, because SPY has shown it has no interest in testing 420s, so the only other way for it stabilize itself for continued selling is a prolonged period of choppy movement that seems predominately range bound.
- Remember FOMC meeting and announcement this week. More bad news, etc. etc.
So 420s off the table?
Yup, pretty much. Unless SPY tanks down below 370 and closes down there, which would trigger massive rebound buying and bounce, we can pretty much kiss 420s goodbye. And even if that happened, I think it would be capped at 415.
Bullish / Bearish Breaks & Trading Range:
You really don't need them. The chart couldn't be clearer. This is actually swing worthy and I DO NOT SWING! But this is a very convincing setup here to short down to the 70s.
But if you insist, the predicted trading range for next week is:
375 - 400
Hard Buy Area:
Hard buy area is a drop to or below around 375. This would be MUCH lower than -3 SDs and I would anticipate a major bounce. I am not swinging anything currently, but will be buying at those levels for a bounce.
Words of Wisdom
- Unless we drop to or below, I would say 375 - 376, don't swing long. Seriously, swinging long is diminishing returns here. Its far too risky currently and in this market to keep any open long position, IMO. The volatility and everything is just insane and you will be losing more than you are gaining.
- Identify your biases! I was obnoxiously long biased this week for whatever reason. Despite the fact that we were approaching that time series target. But my thinking was just we needed to see 420 before hitting that time series target and didn't consider this could tank, like in 2018, and just do a consolidation period to stabilize SD. I figured we just pop to 420 and then SPY can tank in 2 to 3 days down to that target and still fall within the predicted timeline. But alas, I was wrong haha.
That's it!
Hope this is helpful.
Feel free to leave your questions/comments and critiques below!
For real-time updates and premium indicators, consider joining my group at: patreon.com/steversteves
For real-time updates and premium indicators, consider joining my group at: patreon.com/steversteves
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