Swing High

Quite a bit of bullish activity in the markets today. SPY gapped up this morning and did not come back to fill the gap. The bull flag formation I mentioned in Monday’s analysis is looking very healthy right now. I added another thick orange line to my daily chart to show the bull flag I am seeing. Despite the pop, SPY came back down and closed below the upper orange trend line. In that context, we are still in the early stages of a down trend. I want to see tomorrow’s close below that trend line, or else I will be out of my bear position for a loss and will take up a small bull position. Also, the volume today was not stellar, but rather average.

That being said, if the bull flag gets confirmed, then we can really shoot up and test our recent highs. Expect resistance at 106.50 and 107. If it goes on to test away the 108 mark we should quickly approach 110, and the next stop after that is the 119-121 area.

If we mark a swing high here at the orange line, then SPY is probably going to test our recent swing low at 102. Under that we have support at 100, 98, the 95 area, and 87 if it prints. Of course, expect support from the rising 50 day moving average.

I dissected an hourly chart for support/resistance areas near by. The thick red lines are support/resistance areas that I see.

Tomorrow will be critical in defining our next few trading days. Let’s see who wins the bull flag vs down trend argument.

Happy Trading,

Jason

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