What Did I learn about the Market Today?
Today’s session on the SPY saw a notable rejection at the tapering purple trendline, leading to the formation of a bearish hammer candle. This particular candlestick, while having a small body, signals that sellers initially pushed the price down, but buying interest managed to recover some ground, though not enough to negate the bearish sentiment of the rejection at resistance. This bearish action occurred off the 5-day simple moving average (SMA), which typically acts as a short-term dynamic support in an uptrend.
Compounding this technical signal was the news of a poor bond auction today, which contributed to increased selling pressure on higher volume. Despite this, it’s crucial to acknowledge that the SPY remains in a daily uptrend. Therefore, attention now shifts to key technical support levels. The first significant level to watch is the 200-day SMA, which not only provides long-term trend support but would also represent the “cup” portion of a potential cup and handle pattern being formed, suggesting a retest of its base. Furthermore, using Fibonacci retracement levels from the recent bear market lows to the current highs, potential pullback support zones are identified at the 23.6%, 38.2%, and 50% levels, as visually highlighted by the white circles on the chart. A sustained break below these levels would indicate increasing bearish momentum.
There are usually one or two ‘big plays’ each day. If you identify what the ‘big plays’ are and the key stocks, trading becomes easier. Why? Because you’re getting yourself in the right stocks at the right time. Today, there was only one ‘big play’ in play as the market chopped in range for most of the day. The main play was 1) Opening drive with A+ ORB or MAL (Moving Average Longs). Later in the day, we had negative divergence with MACD and a heavy volume sell-off.
Personal Reflections
- What Did I Miss? I missed the MAS ( Moving Average Shorts). There was a break of the 5-Day SMA and led to many stocks breaking down.
- What Trade Did I do? I traded a few MALs. Got a get entry on an ORB for HUT. Failed to keep the original stop. Took a swing at RELY and it immediately failed to cooperate.
- What Worked Today? Cypto stocks and tech MAS after the 5-Day SMA breakdown.
Today’s SPY Trade Setups and Analysis
- Beautiful rejection of the 5-day SMA at the head of a H&S.
- There was a C&H break of the 5-day SMA
- There was a red algo break of the 5-day SMA
- Lastly, there was a continuation short with the purple algo
