SPY 6/7/2022 for AMEX:SPY by rudcharts

The good ‘ol SPY

Sad to see what miss placed hope can do. The “investor” aka the bag holder, continues to “hold”, “buy low”, and “average down” with hopes the market bottom out and the bull run will continue.

Let’s review this chart and see how we got here.

Just before COVID, SPY had reached all-time highs. Then Feb.’20 everything came crashing down.

The government printed out a bunch of money and by June.’20, we saw a Golden cross with the 50 ema crossing above 200 ema . This signaled the bullish conditions in the market and shortly we saw start to the continuation of the SPY Uptrend.

With the uptrend resuming in Jun.’20 with price at 300, it continued its move upwards until Nov.’21 where it found resistance at 470.

Price at this point entered a sideways range between 449 – 470. It proceeds to break out upwards from range late Dec.’21 and looked to continue the Uptrend. Unfortunately, the move was short lived, and price fell back into range. The breakout was deemed a “false breakout.

By end of Jan.’22, price breaks down from the sideways range and what looks to be the end of the Uptrend. The sideways range can now be classified as a Distribution stage.

Price breaks down to a low of 415 where it finds support and pulls back. By Apr .’22, the pullback move fails to make a higher high. During this failed higher high pullback, we also had an Overbought Stochastic signal.

Possible downtrend + pullback to resistance + Overbought stochastic = Short trade. This was the 1st short entry signal for SPY .

Support at 449 has now been turned into Resistance.

From the 1st short entry at 449 on Apr .’22, price breaks down and we see a Death cross with the 50 ema cross under the 200 ema . This signaled the bearish conditions in the market. Price proceeds to make a lower low by moving down to 388 by May’22.

This lower low now confirms SPY Downtrend.

After finding support at 388, price pulls back to 415 and its where we find ourselves currently.

This 415 level was the previous low which was acting as support and was broken. Price is now looking to turn previous Support into Resistance once again.

At this level, we also have the 50ema acting as Dynamic Resistance and an Overbought stochastic signal as well.

We have a confirmed downtrend, a pullback to resistance, and an Overbought stochastic . This is entry #2 to short SPY .

Its ugly……

Uptrend was broken.

Distribution stage confirmed.

Death Cross.

Higher lows

Lower lows

Downtrend confirmed.
MACD is bearish territory.

Bag holders aren’t holding on to “hope”, they’re just delusional.

I will be entering trade short.

Entry: 415.45

Stoploss: 433.88

Target: 355.37, 14.67%, 3.5 RR ratio

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