I actually thought today might have been the day. The day the $SPY finally breaks out of its pennant and below the 200day MA. Well, it did, and then retraced that move completely ending us with what is technically considered a reversal doji daily candle. We could see a little more upside based on that but consider a couple of other things that is keeping me from jumping on the Bull train just yet. 

  1. We did break through a long term support trend line that goes back years. Yes we reclaimed it but the thing about trend lines is that the more we test and break momentarily the weaker they become. This is true for resistance lines as well 
  2. We are below the 100, 50, 21, and 8day moving averages. For me, I watch the 8 and 21 more closely. For as so long as any asset class is below those MAs I am a seller. The reverse is true for when above. Extenuating circumstances aside. 
  3. Even though we closed with a doji candle we still closed Below yesterday’s close. 
  4. Technicals: I see no sign of any bullish divergence on the RSI nor are we in oversold territory. The RSI was 43.86 on closing. The MACD is positive but the momentum has been declining meaning the strength of any uptick in price has less validity behind it. In fact, I just looked at the MACD on the E-minis and we now have the first negative daily tic on the daily. 
  5. The overall pattern just doesn’t look bullish. We are still under the falling trend line from the highs and have tested the lower support multiple times.
  6. Too many geo political uncertainties so I’ll just say: Trade, Iran, President Trump.

Bullish Case:

  1. 200day MA held today as support.
  2. Broke through but then regained trend support. 
  3. Doji daily candle. 

 

 

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