Seven Things I See On the $SPY Chart

Seven Things I See On the $SPY Chart

  1. Longer term uptrend still very healthy and intact, long term trend followers have been able to let long equity positions run for over a year now.

  2. Short term we are still a little overbought here and it would be healthy for a retracement to the 21 day or 50 day or some base building in a price range before we have a better probability of higher prices.

  3. Right on cue as I have discussed before on this blog the 70 RSI on the daily chart is a concrete ceiling that stops upward momentum, while the RSI is not a great indicator for momentum stocks it works beautifully on the $SPY the vast majority of the time. The 70 RSI could not be taken and held last week  and that was where the all time highs quit advancing.

  4. The 10 day sma was lost on both the $SPY and the $SPX on Friday this is my biggest line in the sand between whether I look to trade the long or short side. (Interestingly the 10 day ema held in both indexes for those that watch that line).

  5. In 2014 I have played bearish credit spreads using $SSO calls, my trades have been betting that the best odds were that $SPY would not continue up after crossing into the 70 RSI territory. In week 1 that worked. It is my best trade idea when I have no short signal and it is too extended to enter long.

  6. For six days $IWM has been out of steam and it generally leads the risk on/risk off trend.

  7. I will be looking to buy a dip reversal at the 21 day ema or the 50 day sma if it gets to either of them & bounces and holds until the end of day.

Seven Things I See On the $SPY Chart