SPY Price Action
- SPY (not SPX) Acquires Measured move target
- SPX 2500 target still in motion
- IWM Acquires measured move target.
- Topping pattern present in SPY after target acquisition
- Topping pattern in motion in T2108 Breadth
Here was a chart I shared last September 2017. Both targets have now been acquired.
Here we are today.
Next week I am watching this topping pattern potential. Key word. Potential. We are seeing resistance at the red vwap and a move below. If we can get above last weeks highs, I think we have to be thinking about a move to 250. However, if Thursday’s close holds as resistance, here are the levels to watch. I would be very happy to see a flush to 242.76 and the look to be long there into 250. Wishful thinking but would get some fear back in the tape for a move higher. It would probably take a gap to get us down there but could happen off this target acquisition. The potential for a gap up above is there as well. The point here is there are levels of support to watch as 250 remains a target from the range breakout. Seeing a bearish H&S Acquire it’s target would be an amazing development. We haven’t seen a bearish pattern a acquire it’s target in over a year. Will this be the first?
VIX – Inverse H&S? Something to keep an eye on is the potential pick up in volatility as these targets get acquired.
T2108 % of stocks above 40 DMA has seen follow through on it’s topping pattern. Target is 51. This would very likely take the market indexes lower in the immediate term.
BAC – Monthly chart remains bullish but may need more time.
XRT – Trying to put in one heck of a monthly candle. Look for follow through in August.
TRIP – As Retail looks to rally, this one is setting up. Could see a bit of a short squeeze into earnings.
COST – Take a look at the 30 min chart on this one as it tries to hold this VWAP level again. The potential for a bounce back into 169 (61.8 fib from the selloff) seems very real as that has been the pattern so far.
IBB – Long term still looks fine. Short term, could fill that gap and test the vwap from the 7/19 gap up. Both are at the same place. That is an area to look to buy if you missed this move. Below that things get a bit more questionable in the immediate term. I will be keeping an eye on it.
The Bottom Line:
SPY has acquired it’s upside target, IWM has acquired it’s upside target. While there are bullish technicals still in motion, the key targets have been acquired and we should not be totally take off guard if the market sees some profit taking. While the market has yet to do anything wrong, the potential for a topping pattern is on the radar and should be respected. We are headed into month end here, so will be very interesting to see how the market handles it as these targets get acquired. Personally, would love to see a 2 month sell off correction and then a rally back to 2500. Would be healthy and give us better opportunities. While the foundation is there, let’s see how it plays out. We haven’t seen a bearish pattern acquire a downside target in a very long time, will this be the first? 244.36 would be the target. A whopping 1.5% dip! LOL! Like I said over the passed couple of weeks in the nightly reports…. I think this is the time to really start making sure you are trading your best setups only and making sure you are checking your internal charts closely and figuring out where to stop out. This is in case of a larger correction. Please email me if you would like my insight.