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- $SPY continues to be range bound in 2015, with a .86% year to date return. In this market, buying dips and selling rips has been where the money is made. Buying weakness and selling strength.
- In range bound markets, horizontal trend lines are can be traded based on previous support and resistance, as seen in this chart.
- The next four levels of potential support are $205 based on a previous resistance, the 200 day SMA, $202.51, and the 30 RSI. I will be a buyer of any initial drops to the 30 RSI.
- The RSI is showing price weakness here.
- The MACD is still showing a bearish crossover.
- The price is in a short term downtrend, and under all key short term moving averages: the 5 day EMA, 50 day SMA, and 100 day SMA.
- The stock market as a whole is not currently under accumulation, with new money pushing it higher. Stocks as an asset class are just being traded inside a range.
- One reversal sign out of this price weakness would be a bullish reversal candlestick and close over the 5 day EMA, while a dip buying opportunity would be a dip to the 200 day SMA or the 30 RSI. This presents a good risk/reward buy signal.
- For the past two weeks, morning price action strength has faded, as we start higher and end lower for the past 8 straight trading days. In downward trending markets, price tends to open up and finish lower due to distribution of positions into strength.
- It will be difficult to continue with a sustained uptrend until the Greece headline is behind us. The chart will likely see high volatility until the market reaches a perception of a resolution on Greece.
