SPY: Week of July 17th

Steversteves 已更新   
Feels like forever since I posted a weekly analysis for SPY. So here is my analysis for next week!

The calculated targets and range are in the chart above.
Probability is incredibly bullish, saying Hundo P 454 BUT the market has not been following my prob models as loyally as it had since 2022 and the beginning of 2023. It has been really quite erratic over the past 3 weeks (I should qualify, it has been erratic when the probabilities have been bearish, but pretty on point and exceeding targets when the probability are bullish, so this is something to also keep in mind). So I think its important we take a little bit of a deeper look at things.

Two things of note for next week.

1. We have quite a bearish reference target at 447.86. So we know that selling down to AT LEAST 447.86 is pretty certain.

2. The current month baseline average (the average between the current monthly high and the current monthly low) is around 444. 444.67 is also the first calculated low target (omitted from chart because I only ever count the 2nd and 3rd targets).

There is one other thing of note, albeit highly subjective but still worth mentioning. And that is the fact that the market remains incredibly over-extended. We have been in a perpetual uptrend with like no pullback at all.
Everything is pretty capped in terms of a distribution perspective. Tech, SPY and even IWM have been pushing into their 0.1% probability ranges on the moderate timeframes (see chart below):

I can also take this opportunity to showcase a couple of newer indicators that I actually plan to release publicly once they are finished in Beta mode. One a forecasting modeler, which will be the first chart and the other is a quadratic modeler which has actually really helped me lately with the market being super erratic.
Let's get into the forecast modeler first (see chart below):

So in the chart above, we need to pay attention to the 30 candle period. Why? Because this is SPY on the 1 hour chart omitting premarket trading. Thus, there are just over 30, 1 hour candles in a week timeframe period and we need to look to see what the anticipated range is for the end of the week.
Here we can see we are well above where the anticipated range should fall within the next 30, 1 hour candles, which is between 437 and 450. The most likely result target being 444.25.

So we are seeing that 444 again.

If we look at the quadratic modeller (this is what I have been using to follow and track the current trend with how erratic the market has been), this is what we have:

With it set to 350 candles, which is the current strongest uptrend on the 1 hour, we are again rejecting the top of the trend range and heading back to the median line (which is just below our weekly reference target). The bottom of the uptrend range rests around 441 which also happens to be the second official weekly low target (441.12).

So verdict?

We really should be seeing a move towards 444. Mathematically, all signs point to it. Probability is very bullish and I think that will remain true, once we get more of a sustained pullback.

That said, my personal concern is actually less of how far this will pullback and more of, where should I add to long positions. At the end of the day, while we took out our 3 month high prob target, we still have the 6 month and the SPX targets all chilling at even higher highs than we have seen thus far this year.

Probability remains to the upside at this point and I am not overly concerned that "the top is in" so to speak. Because its most likely not based on the probability and the targets.

One thing of note I want to quickly mention, looking at the flow of leveraged share volume, I noticed something curious:

QQQ and SPY remain with overall bearish positioning; however, total volume is trending down. Whereas on IWM, overall positioning is actually fairly bullish by comparison with volume trending up. IWM has seen quite a lot more volatility than normal lately and has been a bit more to the point than SPY. Something to keep your eyes on for sure.

Safe trades everyone!

Well, I am glad that I clarified when the probs are bullish SPY tends to have no qualms about following through.

On track to hit the 454 TP today.

Be careful, reference target still outstanding.

Safe trades everyone!

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