More SPY consolidation

2019년 9월 17일

SPY is consolidating on the 1 hour chart.

With recent events - air strikes on Saudi refinery, possible war with Iran, Fed uncertainty, etc - I am leaning towards "option 1."

Volume has steadily declined since the start of the consolidation which tells me a break out is soon to occur. The RSI has been trending downwards since before the consolidation, which tells me the break-out has a bearish bias. Combine these with all the uncertainty right now, as well as an overpriced market (based on S&P PE ratio), and I believe the break will be to the down side. There is also the problem SPY is having trying to break back above the long-term up-trend.

If it breaks below consolidation, I think it's virtually a free fall down to where the initial gap up started. From there, who knows? Maybe the gap will get filled ... I will have to re-evaluate at that time. And, this is all assuming a break to the downside happens. When it breaks (either up or down) I plan on entering an options position.