SPY. The cryptic hot mess of a person you meet at the club and can't tell whether they are DTF or not.
That is SPY and, honestly, the whole market this past week and a half.
I will be honest, I haven't played SPY at all this week. My new found love is actually MSFT. I have been day trading it daily and today is the first kind of touchy issue I have had with it, attempting to short it despite everything saying bullish, lol. So I have been neglecting SPY and just completely uninterested in its BS. But I thought I would share my thoughts on where this could go.
My thoughts?
Who effing knows!
SPY left us in a very interesting spot at close and the reason why I felt like it merited a post. It left at the top of that range (you can see it in the chart above with the red lines) that it has essentially been bound to for the past almost 2 weeks. So, let's go over what we know: and why
1. SPY is not strong bc it hasn't been able to break out of this channel.
2. SPY is not weak bc it hasn't been able to break down from this channel.
3. Short interest on SPY is diminishing as evidenced by the call put ratios and more call volume picking up.
4. This week has seen massive offloading of puts (thank you @stein3d for sharing this information ;) )
5. SPY is stuck in this channel and has yet to make any movement to further bring itself out from being oversold (in terms of its Z-Score and standard deviation from its mean). This is problematic because for an aggressive sell to happen from this point, it would put SPY into a very hard oversold area that would lead to an astronomical technical rebound more aggressive than we have seen thus far (like COVID crash type rebound).
6. No one is panic selling or buying yet bc volume has been decreasing without any major changes in SPY's overall trading range
7. SPY has yet to touch 420 or any of the key bullish targets.
8. We have a big catalyst on Friday with CPI earnings, the last two CPI earnings releases were complete polar opposites in stock behaviour, so predicting the result may be a little nuanced.
Verdict
It may sound like I am being long biased and maybe to an extent I am. The thing is, I just don't see SPY breaking down aggressively from this point. Tomorrow we could continue to be range bound for sure, sell off back down to the bottom of the range but at what point will SPY gun to breakout or down from this channel? Like I am good with either or, breaking out or breaking down, I just want some decision because right now, there is just no conviction either way!
The chart is a hot mess. Futures chart is also a hot mess but slightly more clear, so I will share what I see there:
So who is right?
I guess we will find out sooner than later.
What does this mean?
Here is what I, personally, truly believe:
1. SPY will likely try to test a bit higher. I am not saying tomorrow, but at some point I think SPY will want to try and break past 416 for a tiny bit more upside. Whether it goes a bit lower first, I am not sure. This could retest 405 or 400 and then decide to bounce from there, but the end result being somewhat of a bounce. The fact that SPY has not sold off back to the 300s in and of itself is telling. We also have some key bullish indicators on the weekly chart on ES. You don't need to be tell you, you simply look at it and you will know what I am seeing.
2. The end result is that SPY will take a long tumble in the near future. At what point, I am not sure, it is taking longer than anticipated but SPY and the whole market has sold really hard lately and falling hard again from here is a lot of pressure. But absolutely If you want a buy and hold position for 2022, its inverse ETF for SPY or DIA for sure (not financial advice! ;) )
What to look for tomorrow?
Bullish break for tomorrow is over 418. Bearish is under 411.
But really what you want to see, if you are bullish, is a break over 416 and if you are bearish, a rejection before or at 416.
Running some math, tomorrow the open price is the make or break deal. Opens below 413 have a very strong likelihood of being bearish. Any opens above 413 have a very strong likelihood of being bullish.
Of course, play safe and plan your entries your way. But keep this in mind.
That's it!
Trade safe everyone! Let me know your questions. comments and critiques below!
That is SPY and, honestly, the whole market this past week and a half.
I will be honest, I haven't played SPY at all this week. My new found love is actually MSFT. I have been day trading it daily and today is the first kind of touchy issue I have had with it, attempting to short it despite everything saying bullish, lol. So I have been neglecting SPY and just completely uninterested in its BS. But I thought I would share my thoughts on where this could go.
My thoughts?
Who effing knows!
SPY left us in a very interesting spot at close and the reason why I felt like it merited a post. It left at the top of that range (you can see it in the chart above with the red lines) that it has essentially been bound to for the past almost 2 weeks. So, let's go over what we know: and why
1. SPY is not strong bc it hasn't been able to break out of this channel.
2. SPY is not weak bc it hasn't been able to break down from this channel.
3. Short interest on SPY is diminishing as evidenced by the call put ratios and more call volume picking up.
4. This week has seen massive offloading of puts (thank you @stein3d for sharing this information ;) )
5. SPY is stuck in this channel and has yet to make any movement to further bring itself out from being oversold (in terms of its Z-Score and standard deviation from its mean). This is problematic because for an aggressive sell to happen from this point, it would put SPY into a very hard oversold area that would lead to an astronomical technical rebound more aggressive than we have seen thus far (like COVID crash type rebound).
6. No one is panic selling or buying yet bc volume has been decreasing without any major changes in SPY's overall trading range
7. SPY has yet to touch 420 or any of the key bullish targets.
8. We have a big catalyst on Friday with CPI earnings, the last two CPI earnings releases were complete polar opposites in stock behaviour, so predicting the result may be a little nuanced.
Verdict
It may sound like I am being long biased and maybe to an extent I am. The thing is, I just don't see SPY breaking down aggressively from this point. Tomorrow we could continue to be range bound for sure, sell off back down to the bottom of the range but at what point will SPY gun to breakout or down from this channel? Like I am good with either or, breaking out or breaking down, I just want some decision because right now, there is just no conviction either way!
The chart is a hot mess. Futures chart is also a hot mess but slightly more clear, so I will share what I see there:
So who is right?
I guess we will find out sooner than later.
What does this mean?
Here is what I, personally, truly believe:
1. SPY will likely try to test a bit higher. I am not saying tomorrow, but at some point I think SPY will want to try and break past 416 for a tiny bit more upside. Whether it goes a bit lower first, I am not sure. This could retest 405 or 400 and then decide to bounce from there, but the end result being somewhat of a bounce. The fact that SPY has not sold off back to the 300s in and of itself is telling. We also have some key bullish indicators on the weekly chart on ES. You don't need to be tell you, you simply look at it and you will know what I am seeing.
2. The end result is that SPY will take a long tumble in the near future. At what point, I am not sure, it is taking longer than anticipated but SPY and the whole market has sold really hard lately and falling hard again from here is a lot of pressure. But absolutely If you want a buy and hold position for 2022, its inverse ETF for SPY or DIA for sure (not financial advice! ;) )
What to look for tomorrow?
Bullish break for tomorrow is over 418. Bearish is under 411.
But really what you want to see, if you are bullish, is a break over 416 and if you are bearish, a rejection before or at 416.
Running some math, tomorrow the open price is the make or break deal. Opens below 413 have a very strong likelihood of being bearish. Any opens above 413 have a very strong likelihood of being bullish.
Of course, play safe and plan your entries your way. But keep this in mind.
That's it!
Trade safe everyone! Let me know your questions. comments and critiques below!
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