What is Next for SPY After the Rough Start?
There was a bounce Friday, but will it continue or will markets resume selling?
The trendline broke and so did the 20-day simple moving average, but buyers stepped in Friday and prevented an entire week of red.
Now the question every trader is asking is, will we see more upside or was this the start of a big reversal?
I don’t think we get either.
Taking a look at the chart, SPY did hold above the 467.43 support level which is encouraging.
And RSI curled up to close the week above 50, which is also a positive.
So why not be bullish from here in the near term?
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First, I’m not bearish overall. I just think we have additional room to drop before we resume moving higher.
As noted, the 20-day SMA broke but another thing to recognize is the retest of this same line and rejection on Friday.
The long upper wicks on both Thursday and Friday are also typically bearish, showing the bulls were not able to support those higher levels.
The candles for SPY also have plenty of space to fill before touching the 50-day SMA, which is the moving average many are watching closely and for good reason.
If the 50-day SMA does not hold up and shares drive right through, look out!
For now, it would be fairly healthy to see a pull back to test this level which would be near support at 451.93, call it 452.
It is also worth noting that a drop to the 50-day SMA would only be a roughly 5% decline from the recent high and about 3% from current levels.
That is nothing big when compared to the returns in 2023. And I think it would be a nice set up for another bull run in 2024.
Put me down for a retest of 452 before we push higher. And keep the 444 level below in mind as a gap fill (November) could be in order. This would also be reasonable but slightly more concerning.
Overall, I remain bullish and am looking for opportunities to buy these dips.
Tomorrow I will be updating the latest for SHOP, OXY, MRVL, and AMAT as well as adding trade ideas for RIVN and TSLA.
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Let me know if you have any questions and have a great weekend!
-Nate
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
Absolutely agree ... solid analysis .... happy Saturday Nate