Market internals are flaring up again…

The SPY is at a critical level… it toyed with all-time highs for a week… as mentioned in my previous post… I wanted to wait for a pullback before jumping in… 

Well, we have the pullback… what’s next?

As we approach the start of the fourth quarter there is one thing all traders can agree on—an expected surge in market volatility and uncertainty. 

After all, we still have:

  • Trade deal- still up in the air
  • Political turmoil with the expected announcement of a formal impeachment inquiry
  • FAANG stocks are facing risks after Trump commented about China and social media platforms

All of which lends to more volatility and a plethora of opportunities to finish out the year with a bang.

At the same time… caution is required. 

And timing is everything.

In my latest market update, I spell out the key levels every trader should know in the SPY. This will keep you on the right track. And help you avoid the chop.

 

What to Watch for Now

 

The story of the market…

Two weeks ago I wrote a post about support and resistance (read it here) and shared the chart of the SPY below…

The SPY created a range between support around 282 and resistance just under 295.

On the chart you see the SPY breakout point, creating a move above the resistance level of 295… and I mentioned that many times a stock breaking a major resistance level will move up to test a previous high (orange line in the chart).

 

 

So what happened next? 

After the breakout, the SPY ran up to test resistance within a few days. 

Look at the updated chart of the SPY below…

You can see where it reached its all-time high (orange line) and stalled out… as expected due to the major resistance level there…

 

 

So what pushed the SPY to highs? Headlines… or a Breakout… read post here

Where are we NOW?

When a stock breaks above major resistance, the previous resistance often times becomes a new support level…

The 295 breakout point was a major resistance level and once it broke through… 295 was set up with the potential to become a new support level… yet to be determined. 

As mentioned in the last market update… I didn’t expect the SPY to just rip above the highs without some resistance…

More so, I was looking for a pullback from highs, due to heavy resistance there… and then we would get a chance to see if 295 would indeed create support or not…

So here we are… we got the pullback from highs… back to the 295 level… 

Now what?

Look at the updated chart below… this is the level to watch… we are at an inflection point in the 295 area…

If we get confirmation of support… I will look to the long side, as we could retest highs again…

Now on the other hand, if we see a break below, I’ll be looking to sell… 

And if it does break to the downside… be careful as it could get nasty real fast… the death line is still at 282 and we could retest there, or much worse.

 

 

While it may seem a daunting task to keep up with the market… and even more daunting, trying to make sense of it.

There really is no need to worry… we have our support and resistance levels, and chart patterns that work in any market.

I have been trading for a decade and have been profitable in every market that has come my way… 

How?  By sticking to what works.

And what works for me is to let the charts tell the story…

I have built a system using technical analysis… finding specific chart patterns I have seen work over and over again, important levels to watch, and a few easy to read chart patterns—they’ve yet to let me down.

Best of all, my system works with any account size. 

In fact, I put together a special training for those wondering how I trade different sized accounts. It’s a question I get asked a lot, and I’m happy to have put this together for you.

 

Watch Here

 

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