Hi friends! Welcome to this update analysis on SPY, the ETF that tracks the S&P500. Let's get right to it! Looking at the daily chart, you can see that the SPY continues to trade inside of the big bear flag. Interestingly, the 50 EMA (in orange) is beginning to intersect with the top of the flag. If you look closely, you can see that SPY briefly rallied above the flag, but it ran into a brick wall at the 50 EMA, and has since reversed, printing a bearish engulfing candle. It will be interesting to see if we close with a bearish engulfing, because at the moment, it certainly looks ugly. Given the bear flag, this overall weakness, the rejection at the 50 EMA, and the fact that the S&P recently violated the bottom of the uptrend channel and the 200 EMA (in purple,) I think there is a high probability that we will see a breakdown from here. Further adding to the bearishness, the recent increase in volatility has signaled a shift in market sentiment, earnings are weaker than expected, the trade war is looming, conflict in Syria is on the table, the fed has announced plans to hike at a faster rate, inflation is expected to increase, and there is tremendous weakness in the bond market. So, there is a mixture of technical and fundamental reasons to believe that this market is in for more downside. I believe that there is a high chance that we could see a breakdown from the uptrend channel, and a real correction in the coming weeks.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
Take a look at the NASDAQ Composite daily chart. We could be forming the right shoulder of an H&S pattern.
sublimelaxer
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Magic, what I love about crypto is it has gotten me interested in TA, and I'm now interested in other markets such as this that have always felt inaccessible to people my age (under 30 without a ton of money to invest). Are there exchanges where one can short these markets if our own research has led us to a similar conclusion as yours? I sincerely appreciate the feedback and all the help you've provided to new traders.
BatterT
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@sublimelaxer, I feel exactly the same and would have the same question ;)
patcic
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@BatterT, For shorting crypto markets, Kraken and several exchanges offer it. Just do a Google search.