S&P 500 Market Update Part 2 + Trade Plan

6 天前

SPY

Greetings everyone,

Let’s analyze the recent price action of the S&P 500. I SPY 🕵️with my eye a reversal .

The index reached a key milestone, breaking above $600 USD shortly after the US election. However, this achievement was short-lived. After briefly crossing the $600 level, it was quickly rejected, falling back below—a classic case of what traders often call a fakeout or a “look above and fail.”

Momentum Shift: A Rollercoaster Analogy

Imagine a rollercoaster that has climbed to its peak with tremendous force (the catalyst). The potential energy built up from the climb is unleashed as it starts descending rapidly. Similarly, after a period of intense buying pressure, the market often runs out of steam, stalling and reversing direction—just like our rollercoaster hurtling back downward after reaching its height.

What Happened Next?

Following the breakout, extreme selling pressure set in, driving prices down sharply.

During market hours, the price bounced between highs and lows, showing signs of uncertainty and volatility.

Renewed Interest and Its Consequences

As the price dipped, confident buyers stepped in, creating a back-and-forth movement akin to a seesaw.

This tug-of-war in price action is evident in the bear flag pattern which formed on the chart. While the bear flag doesn’t guarantee further

downside, it often signals the potential for continued selling pressure based on historical patterns.

What’s next for the S&P 500?
I have my long term support target which I expect price may revisit in order to build enough momentum aka buying pressure. For its next major move - whether it’s up once more or continued lower

Major Levels:
586 Major SR
591 Strong Resistance as of late
596.89 Zone to consider going long if price renters and holds.

Trade Plan:
I gave out the trade idea to short if priced
Reversed at $600 in my previous market post.
Give it a like 👍.

If you were able to catch that trade through reading my previous or on your own accord please like or drop a comment on how you executed the trade.

Trade Plan
Assuming you were trading since 600, I would be de-risk by taking some profit. Setup:
1. Bearish engulfing at major resistance levels & short to the previous lower levels.
2. I would also be looking for a strong reversal at the levels noted to re-enter the short.
3. The end goal is 588.xx + a small margin of error.

Thanks,
- C Lemard