$SPY Chart Support Levels: 12/11/2016
Chart Courtesy of StockCharts.com
  1. The first support for $SPY on any small pullback would be the 10 day EMA. $SPY is over two ATRs from the 10 day EMA and a pullback there would be a normal pullback inside a parabolic uptrend. We should see this next week.
  2. Over the next few weeks the next key level for support would be the $218.50 old resistance that it broke out of before this run. It is normal to pull back to old resistance one time after a break out.
  3. An overbought 77 RSI in $SPY is extremely rare, this is usually the area where momentum is lost and we fall back to the 70 RSI.
  4. The MACD is extremely extended here after this powerful move. The bearish crossover did not happen last week. As momentum slows we could see this lines start to close their gap.
  5. The ATR expanded last week briefly but it was upside volatility. No warning sign here yet to the downside.
  6. Volume was excellent last week showing accumulation and a lack of sellers at lower prices.
  7. At all time highs everyone long $SPY is currently profitable with no selling pressure as no stop losses or trailing stops are being triggered.
  8. Shorts being forced to cover is adding fuel to the upside as reversion to the mean strategies and short side swing trading are failing.
  9. With $VIX at 11.75 we are near a short term top in the market going straight up, the volatility cycle usually starts back at a $VIX 11.00. We will not necessarily trend down but price could start to swing in a larger range both up and down as we approach a $VIX 11.
  10. The risk/reward does not favor new longs here but having a trailing stop to lock in profits when this bull party starts to end.

I am currently long $TQQQ for the second time in recent weeks as it has given me dips to buy. I am looking to lock in profits in $TQQQ next week and buy dips in $SPY.