SPY: What you need to know for the week
Hey everyone!
For you TL:DR peeps, key points and interesting stuff summarized at the very end.
Otherwise:
Hope you had a great trading week and finished green!
I, after an acrimonious break up with TSLA, came gravelling back, as you do when those types of relationships terminate, and begged for forgiveness. TSLA accepted and I am finishing this week just loving that stock again. Moral of that story is SPY has been my neglected mistress and its time to catch up! Also, I will post an idea on TSLA with some math ranges etc. since we are friends again.
But for now let's get to SPY. First, of course, recap:
- SPY remained range bound in its predicted weekly range of 398 to 421. This signals to us that SPY wished to consolidate.
- Not only did SPY consolidate, but it did so without showing any bias in either direction (it neither approached its weekly high range nor low range) and it did all of this while smoothing out and cooling down some hot running RSIs on the major time frame.
- SPY is still running somewhat hot on the daily time frame but this is less concerning.
- SPY really struggled getting to a big technical area, that area being 417. This area is actually a key area, IMO, that we need to watch out for in this coming week.
- VIX broke down from some really long standing, key pivotal support which is a huge red flag if you, like me, are bearish on this stock.
Recap Verdict:
Honestly, while I am leaning to a long bias here (which we will get into), I have to admit the evidence is that SPY is neither bearish nor bullish at this point; however, it is displaying some bullish characteristics and an overwhelming reluctance to go down.
Analysis:
- Predicted trading range has seen a bullish divergence. Previous week range was 398 to 421.
- This week trading range is 400 - 421 (in blue on the chart).
- 421 keeps showing up in the projections and this has my eyebrow raised.
Z-Score
- SPY is approaching neutrality and I am honestly loving this. Its just so interesting to see this happening!
- 0 or absolute neutrality would be at a price around of around 430 - 432.
The plot thickens! SO much excitement here. 421 keeps getting printed. Now 430s which just happens to also be a technical area and its just all so very interesting and exciting.
Verdict? Long or Short?
- I have to be honest this is probably a long.
- IMO right now its not overly safe to take any major position. Its okay to make an educated guess and begin scaling in the direction you think its going. However, I really do believe that it would be premature right now to jump in aggressively one way or other because SPY could pull back quite sizeably from where it is before making a leg up. SPY could also completely tank from here. We also have CPI results being released on Wednesday.
- What you need to watch is how SPY treats 417. This is the previous area of resistance where SPY consolidated at. It looks to be repeating this same setup. I think people are skeptical to enter until it is decisive in either direction. You can see this clearly in the chart below:
- I think a break above the resistance cluster area would lead to some pretty aggressive buying. This is just my opinion.
What is going on?
So here's the thing. The question most people have and the issue most people are facing is the conflicting bullishness despite an onslaught of bad news. It is very difficult to understand what is going on here and I myself struggle. But I have done a bit of research and I do have a bit of a theory based on historical performances and logical deduction. Here is my theory, and please know I am not an analyst or finance person or know anything about anything, but here it goes:
The market is entering bull market territory. We are seeing oil and gas tank, DXY tank, and signs that the market is "correcting" or "bottoming" etc. etc. but this has been in the face of horrendous news. The reality is this:
- The news we have been onslaughted with about inflation and economic under-performance and GDP etc. etc. are the same and same again. Essentially we are re-iterating the same scary things in the same boring reports over and over again. The old saying goes, its a lot like learning to swim. At first the sight of water causes panic. Absolute panic and dread. Then you get in the water and almost drown, so you jump back out and stay away for a bit. Then, you go in with a life jacket and realize its not so bad. You do this over and over again and soon the water you see in the lakes, rivers and oceans around you are all the same. Nothing special and nothing fearful, just boring water that you concurred ages ago. Nothing new and nothing scary. The market has learned to swim through this negative news and just doesn't care anymore. Its the same ocean as the last one.
- So what does this mean? We know inflation is a problem. ANd we know the economy is not healthy. HOWEVER, right now that is the news. The economy is not healthy and inflation is a problem. This has not perpetuated any catastrophe as of yet. The USA remains a super power. Employment remains good. COVID is forgotten it seems and everything is hanging together by a thread but still hanging together. The fact is the damage and result of this prolonged inflation and poor performing economy are not going to be felt until later when it compounds and spirals into a full recession. And even when the "official" recession starts, its going to be another delayed announcement. But when this announcement comes, THEN the market will react dramatically and profoundly to this "NEW" news that is a direct result of the repeated "OLD" news, so to speak.
So what does it all mean? IT means that I think the market is just going to do its thing until the economy really collapses. I do still hold that the economy will collapse and a recession will come and SPY will tank to 350s and lower. I just think this may take longer than I anticipated and I need to, as of right now, throw in the towel.
Or it could come next week. I am on the DL hoping that my new found bullishness causes the market to be like "Oh god, he's bullish now! TANK IT! EFFING TANK IT!"
But I am doubtful it will happen.
This is just my theory! And its likely VERY wrong.
CPI Data
I just wanted to make a brief note on CPI data. I just want to cover everything I think you should know going into next week.
CPI data is released on Wednesday and I am actually thinking the results will be better. If you remember the last press release, the white house stated the previous CPI would be concerning but its outdated and "inflation is already improving since then". This leads me to speculate that we could actually see BETTER CPI results this week that would act as a major catalyst.
But you NEED to watch for press releases leading into CPI. If they come out saying "Oh this may be bad but just know its outdated" or something along those lines, then anticipate bad results. But if they hold true to what they released with last CPI results, then this actually could be a very positive catalyst.
Key Points and Need to Know for next week:
- Trading range is 400 - 421
- Consolidation would be SPY remaining within 400 - 421
- Bullish break is a break over 421 and hold;
- Bearish break is a break below 400 and hold.
- Bullish break for Monday break over 415
- Bearish break for Monday break below 411
- Key Resistance area to watch out for is 417, break over this is a REALLY bullish sign IMO
- CPI is on Wednesday and I kind of think this could be a catalyst because I DO think, if the white house isn't lying (Which... lol...I know the irony okay, I get it..) should be better than last CPI results. But watch for press releases signaling impending doom!
That is it guys, thank you for reading and leave your questions/comments and critiques below!
For you TL:DR peeps, key points and interesting stuff summarized at the very end.
Otherwise:
Hope you had a great trading week and finished green!
I, after an acrimonious break up with TSLA, came gravelling back, as you do when those types of relationships terminate, and begged for forgiveness. TSLA accepted and I am finishing this week just loving that stock again. Moral of that story is SPY has been my neglected mistress and its time to catch up! Also, I will post an idea on TSLA with some math ranges etc. since we are friends again.
But for now let's get to SPY. First, of course, recap:
- SPY remained range bound in its predicted weekly range of 398 to 421. This signals to us that SPY wished to consolidate.
- Not only did SPY consolidate, but it did so without showing any bias in either direction (it neither approached its weekly high range nor low range) and it did all of this while smoothing out and cooling down some hot running RSIs on the major time frame.
- SPY is still running somewhat hot on the daily time frame but this is less concerning.
- SPY really struggled getting to a big technical area, that area being 417. This area is actually a key area, IMO, that we need to watch out for in this coming week.
- VIX broke down from some really long standing, key pivotal support which is a huge red flag if you, like me, are bearish on this stock.
Recap Verdict:
Honestly, while I am leaning to a long bias here (which we will get into), I have to admit the evidence is that SPY is neither bearish nor bullish at this point; however, it is displaying some bullish characteristics and an overwhelming reluctance to go down.
Analysis:
- Predicted trading range has seen a bullish divergence. Previous week range was 398 to 421.
- This week trading range is 400 - 421 (in blue on the chart).
- 421 keeps showing up in the projections and this has my eyebrow raised.
Z-Score
- SPY is approaching neutrality and I am honestly loving this. Its just so interesting to see this happening!
- 0 or absolute neutrality would be at a price around of around 430 - 432.
The plot thickens! SO much excitement here. 421 keeps getting printed. Now 430s which just happens to also be a technical area and its just all so very interesting and exciting.
Verdict? Long or Short?
- I have to be honest this is probably a long.
- IMO right now its not overly safe to take any major position. Its okay to make an educated guess and begin scaling in the direction you think its going. However, I really do believe that it would be premature right now to jump in aggressively one way or other because SPY could pull back quite sizeably from where it is before making a leg up. SPY could also completely tank from here. We also have CPI results being released on Wednesday.
- What you need to watch is how SPY treats 417. This is the previous area of resistance where SPY consolidated at. It looks to be repeating this same setup. I think people are skeptical to enter until it is decisive in either direction. You can see this clearly in the chart below:
- I think a break above the resistance cluster area would lead to some pretty aggressive buying. This is just my opinion.
What is going on?
So here's the thing. The question most people have and the issue most people are facing is the conflicting bullishness despite an onslaught of bad news. It is very difficult to understand what is going on here and I myself struggle. But I have done a bit of research and I do have a bit of a theory based on historical performances and logical deduction. Here is my theory, and please know I am not an analyst or finance person or know anything about anything, but here it goes:
The market is entering bull market territory. We are seeing oil and gas tank, DXY tank, and signs that the market is "correcting" or "bottoming" etc. etc. but this has been in the face of horrendous news. The reality is this:
- The news we have been onslaughted with about inflation and economic under-performance and GDP etc. etc. are the same and same again. Essentially we are re-iterating the same scary things in the same boring reports over and over again. The old saying goes, its a lot like learning to swim. At first the sight of water causes panic. Absolute panic and dread. Then you get in the water and almost drown, so you jump back out and stay away for a bit. Then, you go in with a life jacket and realize its not so bad. You do this over and over again and soon the water you see in the lakes, rivers and oceans around you are all the same. Nothing special and nothing fearful, just boring water that you concurred ages ago. Nothing new and nothing scary. The market has learned to swim through this negative news and just doesn't care anymore. Its the same ocean as the last one.
- So what does this mean? We know inflation is a problem. ANd we know the economy is not healthy. HOWEVER, right now that is the news. The economy is not healthy and inflation is a problem. This has not perpetuated any catastrophe as of yet. The USA remains a super power. Employment remains good. COVID is forgotten it seems and everything is hanging together by a thread but still hanging together. The fact is the damage and result of this prolonged inflation and poor performing economy are not going to be felt until later when it compounds and spirals into a full recession. And even when the "official" recession starts, its going to be another delayed announcement. But when this announcement comes, THEN the market will react dramatically and profoundly to this "NEW" news that is a direct result of the repeated "OLD" news, so to speak.
So what does it all mean? IT means that I think the market is just going to do its thing until the economy really collapses. I do still hold that the economy will collapse and a recession will come and SPY will tank to 350s and lower. I just think this may take longer than I anticipated and I need to, as of right now, throw in the towel.
Or it could come next week. I am on the DL hoping that my new found bullishness causes the market to be like "Oh god, he's bullish now! TANK IT! EFFING TANK IT!"
But I am doubtful it will happen.
This is just my theory! And its likely VERY wrong.
CPI Data
I just wanted to make a brief note on CPI data. I just want to cover everything I think you should know going into next week.
CPI data is released on Wednesday and I am actually thinking the results will be better. If you remember the last press release, the white house stated the previous CPI would be concerning but its outdated and "inflation is already improving since then". This leads me to speculate that we could actually see BETTER CPI results this week that would act as a major catalyst.
But you NEED to watch for press releases leading into CPI. If they come out saying "Oh this may be bad but just know its outdated" or something along those lines, then anticipate bad results. But if they hold true to what they released with last CPI results, then this actually could be a very positive catalyst.
Key Points and Need to Know for next week:
- Trading range is 400 - 421
- Consolidation would be SPY remaining within 400 - 421
- Bullish break is a break over 421 and hold;
- Bearish break is a break below 400 and hold.
- Bullish break for Monday break over 415
- Bearish break for Monday break below 411
- Key Resistance area to watch out for is 417, break over this is a REALLY bullish sign IMO
- CPI is on Wednesday and I kind of think this could be a catalyst because I DO think, if the white house isn't lying (Which... lol...I know the irony okay, I get it..) should be better than last CPI results. But watch for press releases signaling impending doom!
That is it guys, thank you for reading and leave your questions/comments and critiques below!
For real-time updates and premium indicators, consider joining my group at: patreon.com/steversteves
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