After Friday's gap down, reversal, and strong buying into the close, today we had the first followthrough day. A short term bottom looks confirmed as all indexes rallied higher into the close on strong volume.
The picture on SPY is looking very bullish into the close. We held the Anchored VWAP from the December 2018 lows (Magenta Line) which has been acting as a key level of support during this entire bull run. SPY is currently sitting above the rising 200DMA meaning we are still within a bull market. The 20DMA and 50DMA seems to have flatlined therefore the intermediate trend is neutral and caution must be taken for a possible change in the longer term trend.
The 30m timeframe is looking even more productive. Throughout the day, SPY had been struggling to breakthrough the 305.25 level where three lines of resistance (200DMA, 5DMA, and Anchored VWAP from start of selloff) were intersecting. In the last 30m candlestick, we blew through this level on strong volume and closed HOD.
I would be careful buying into this bounce tomorrow however. The right time to buy was Friday or this morning and if markets gap up tomorrow, this scenario seems overextended. Volatility is currently at extremes therefore large swings, up or down, can occur at anytime. In the future I would want to see price retest the 305-306 area and then run higher with a V-shaped recovery to highs. If we start to chop sideways, I would expect more downside to be possible.
The picture on SPY is looking very bullish into the close. We held the Anchored VWAP from the December 2018 lows (Magenta Line) which has been acting as a key level of support during this entire bull run. SPY is currently sitting above the rising 200DMA meaning we are still within a bull market. The 20DMA and 50DMA seems to have flatlined therefore the intermediate trend is neutral and caution must be taken for a possible change in the longer term trend.
The 30m timeframe is looking even more productive. Throughout the day, SPY had been struggling to breakthrough the 305.25 level where three lines of resistance (200DMA, 5DMA, and Anchored VWAP from start of selloff) were intersecting. In the last 30m candlestick, we blew through this level on strong volume and closed HOD.
I would be careful buying into this bounce tomorrow however. The right time to buy was Friday or this morning and if markets gap up tomorrow, this scenario seems overextended. Volatility is currently at extremes therefore large swings, up or down, can occur at anytime. In the future I would want to see price retest the 305-306 area and then run higher with a V-shaped recovery to highs. If we start to chop sideways, I would expect more downside to be possible.
註釋
QQQ lead the charge today with a 5.16% gain. QQQ held the 200DMA perfectly on Friday and started to trend up after breaking the down sloping trendline. QQQ had some trouble right at the intersecting 5DMA and anchored VWAP from the start of the selloff, but QQQ plowed through this resistance and closed HOD. This is clear bullish signs and again I want to see QQQ retest this line of resistance, then run back to all time highs. 註釋
The picture on IWM is looking a little less comfortable. The first thing I want to point out is that IWM did not make new all time highs during this 1.5 year run and made a double top instead. IWM seems is be lagging in terms of performance compared to other indexes and is still below 3 key levels of resistance: 5DMA, Anchored VWAP from December 2018 lows, and Anchored VWAP from start of selloff. We are also below a flat 200DMA. The only saving grace is that IWM managed to hold the 145 key level of support.
IWM is currently neutral and ranged bound. I don't see IWM rising to new all time highs anytime soon.
註釋
Across the board price action looks bullish and productive, however as a swing trader I would not be a buyer or seller in this environment. The current high volatility conditions makes swing trading near impossible. Furthermore, the short term trend looks extended and the intermediate trend looks neutral and questionable. I plan to continue sitting on my hands while looking for new possible bull or bear setups.
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