24 Aug SPY breaking monthly 80 band stochastic!
The extensive sell-off on the SPY could be different this time. We saw a similar sell-off in November of 2014 that saw the SPY overshoot under the monthly 15 period moving average BUT managed to regain it as the stochastic held well above the 80 band therefore preventing further downside follow through.. trapping the bears and squeezing to new highs. Why is it possible different this time? The monthly stochastic has penetrated the critical 80 band stochastic support and this can result in a sustained oscillation down as the air comes out of the 3 years it spent above the 80 band! We see this type of move happen every day on the smaller time frames. This doesn’t mean SPY won’t bounce. In fact, the nominal market structure low should set-up on Monday or Tuesday. However, be aware the bears will have the first time in over 3 years to control that monthly candle close under the 15 period ma support and the stochastic 80 band, so expect some aggressive bears at end of the week. Just something to be aware of…
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SPY literally 'rope a dope'-ed a Perfect Storm Breakout attempt catching the bulls with their pants down for an extreme death drop! The 198.05-197.85 fib and the critical 197.05-196.75 are the important support areas. Failing that, the next super fib sits near 194.09-193.89 and 188.74 below there. These are the reversion levels to watch. The 199.67 fib, 200.60 daily lower bbs, 201.27-201.61 superfib cluster and best case 203.93 fib are the bounce areas to watch. Even if you don’t play the SPY or e-minis, the SPY is the headwinds and will affect your positions so it’s best to watch and anticipate price levels ahead of time as they near so that you can plan what to do with any equity positions.
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