What an exciting day! We bounced at 342.17 and entered back Into the downtrend channel thanks to Orangey’s tweet. If you recall, I projected a bounce at 342.65 (read last night’s forecast here) and SPY closed at 334.93 (between bearish projections of 336.09 – 330.95).
However, we are still hugging the uptrend channel so bears shouldn’t feast yet (more on that later).
The gap down from October 1st – 2nd and the drop from the Orange Man’s tweet look oddly similar to me (both were negative news days for stimulus talks). This is why I think it was already priced in (just gut feeling). Expect a minimum of 3-7 point shift on stimulus news. Obviously if it something passes, we moon because everybody likes free money JPOW.
Look out for inverse head and shoulders – could break-out in 1-2 weeks (especially if stimulus talks improve or a deal is brokered (DUH)). Bulls coming in hot to 356.34 if we complete the pattern.
We have a few critical moments on the 1hr chart for tomorrow.
- If we open above 335.20 we may test 42.65 again.
- We may test 330 and bounce up. If we pass 335.20, we may be on our way to 342.65
- If we drill past 330 the bears are in business and a double bottom will begin to form.
- If we hit 330 and bounce up to 335.20 resistance and back down, I believe we are in a bull trap and will drop below 330 easily.
I’m still long on SPY this month because neither party can afford not to pass a stimulus bill. My take is that SPY is still bullish and we will close tomorrow .5-1.5% above open probably around 335.20 marker.
Tomorrow is going to be crazy!
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.