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After the long run up from the recent bottom the risk/reward has shifted against the bulls. The downside risk of a pull back is greater than the potential upside for bulls to gain more profits at these lofty levels.
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In the short term time frame $SPY has begun a trading range with basically a $199 support and $201.00 resistance. This is the first five day trading range since the bounce off the near term bottom at $191 and near the 30 RSI level.
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The stock market indexes need to create a longer price base here before the potential of higher prices are sustainable.
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Historically the 70 RSI on the daily chart has acted as resistance as an overbought indicator.
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$SPY $200 and $SPX 2000 are going to be key resistance levels here.
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The Geo-political risks always create the potential of a sharp sudden sell off with any unexpected news that is not already priced in.
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I would be a buyer of a pull back to the 50 RSI and/or the 50 day sma level.
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I would open a weekly bearish credit spread at-the-money with a break above the 70 RSI.
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What the hell does volume have to do with these last two $SPY rallies? Why do so many still mention it? They were both low volume rallies. Only price pays, you can’t trade volume.
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All the doomsayers with all their predictions are just noise. Trade price, trade a robust system, follow the chart and it is possible to make money in the markets.
