What Did I learn about the Market Today?
Today’s session on the SPY ETF offered several key technical insights. Firstly, the upper Bollinger Band continued its ascent, highlighting that while the market remains in a short-term extended state, the definition of “overbought” is also trending higher, allowing for continued upward movement. Secondly, a significant bullish development occurred with the 5-day simple moving average (SMA) crossing above the 200-day SMA. This “golden cross” is a widely watched long-term bullish signal, suggesting a potential shift towards a more sustained uptrend.
However, not all indicators pointed to unbridled bullishness. The Relative Strength Index (RSI) is pushing towards the 70 level, which typically signifies overbought conditions and can foreshadow a potential pullback or consolidation. Additionally, the magenta trendline reveals a tapering of the current upward momentum. While the trend remains bullish, the angle of ascent is decreasing, suggesting that the buying pressure might be losing some intensity.
The key takeaway from today’s analysis is the confluence of both bullish and potentially cautionary signals. The long-term bullish implications of the 5/200 SMA crossover are significant, but the short-term overbought readings on the Bollinger Bands and RSI, coupled with the decelerating trendline, suggest the need for vigilance. The market may continue higher, riding the upper Bollinger Band, but the risk of a short-term consolidation or pullback is also increasing. Monitoring tomorrow’s price action and volume will be crucial to determine which forces will ultimately prevail.
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 were two ‘big plays’ in play 1) We have a balance range breakout at 10:50 am 2) Then a second distribution range that SPY maintained but QQQ dropped lower for tech second half downtrend.
Personal Reflections
- What Did I Miss? I missed a few Tactical longs.
- What Trade I Did? Yes, netted out with the scalps. Did well with tactical longs on the Mega Caps and EGO Gold trade
- What Worked Today? Tactical Longs off key EMAs and Gold stocks. Also, played two stocks from my Swing watchlist CNX & CAH.
Today’s SPY Trade Setups and Analysis
- We remained mostly in balance the entire day. No major imbalances.
- Twice, the Bears failed to find acceptance below ONL and in the single prints.
- I should have looked for the Look-Below-And-Fail with small size with bullish structure back into range.
