Big drop in the markets today. In my halftime report I predicted that we would see spy chop sideways for the rest of the day and that is exactly what happened.
SPY broke down out of the high base formation it formed on the daily chart. The market internals corroborated the move lower. The next support area is 102 on the SPY. The other major indexes are also showing weakness. The Dow Jones Industrial Average (DIA) also broke down out of a high base today. The Nasdaq (QQQQ) showed relative strength today, but has been showing relative weakness over the past few weeks. The Russel 2000 index (RUT, IWM) has shown significant relative weakness to SPY lately. It did not make a high base formation when SPY did. In fact, RUT made an equal swing high on the daily chart. A double top will be confirmed if RUT can break below $580, which would be extremely bearish.
Thanks for being a part of Swing-High.com! Remember to always trade with a stop loss and manage your risk appropriately.
Happy Trading,
Jason
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Sorry for not providing any analysis on Friday or this weekend. I was in Albany, NY for a racquetball tournament. I have not made any trades since the middle of last week, and I am waiting for a convincing move in the markets. It looks like that conviction may come today.
The markets are currently selling off. This move can be attributed to strength in the dollar (DXY). The TICK, TRIN, and VIX are all reading bearish right now. The VIX is up roughly 8.5% today and is above 24. These readings on the market internal indicators are corroborating the sell off nicely. Intraday the SPY has made a bear flag formation. These usually resolve to the downside.
On the SPY daily chart the high base formation I have been talking about is breaking down. Recently, high bases have been braking down, so this is not too surprising, but it would have been irresponsible to expect a breakdown out of a high base and play the markets in anticipation of one. We have a lower high and a lower low on today’s candle, so a we could see the start of a down-leg here.
Thanks for being a part of Swing-High.com! Check back this evening for your Post Market Analysis.
Trade Smart Everybody,
Jason
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WOW! What a big move we had today. The markets put in a very nice pop averaging 1.5% to the upside. The DOW closed above the important number of 10,000. The S&P/SPY has popped back into its rising wedge formation and should quickly see the 1100/110 area.
Important to note that the VIX did not corroborate the move in the markets today and there are still plenty of bearish signs out there, but for the time being, the markets look very bullish.
Thanks for being part of Swing-High.com! Remember to always trade with a stop loss.
Happy Trading,
Jason
PS. Don’t forget about CPI and Jobless Claims tomorrow morning at 8:30. I will be watching them closely. It is important that you check earnings on stocks you are trading; know what you are trading into!
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