"Pump up the jam, pump it up
While your feet are stompin'
And the jam is pumpin'
Look at here the crowd is jumpin'
Pump it up a little more
Get the party going on the dance floor
Seek us that's where the party's at
And you'll find out if you're too bad."
Happy Friday guys! Sorry for the late post today. Let's get right into our SPY analysis:
It was another convincing overnight pump on more "Stimulus Optimism." The consistent sentiment here is don't worry, we have your back, stay, and keep playing, please don't leave. But, what I see is the Government, the FED, Treasury, Corporate Buy-Back's, and the Media, all sitting at the casino table, and no one else is there. They're playing with their own chips, and hoping appearances will be enough to entice you back into lose your money. It's a convincing show, but not to me.
We're sitting at the upper Bollinger Band on the daily, around 345.50, leaving lots of room to the downside if sentiment shifts. The bulls need to hold the Green line resistance today into the close, as earnings next week could be ugly. I wonder if the "stimulus deal" will come exactly as we're seeing weak earnings and jobs data next week, my guess is yes. But, like I said before, it could also be a sell the news event, which could prove catastrophic for the bullish continuation thesis, if it plays out this way.
I've seen lately some traders are expecting an Inverse Head and Shoulders to complete in the near term. I understand what they're seeing, and while I've learned that anything is possible in this market, and you have to consider new information, and price action every day, I don't agree with this thesis. Given the untidy price action in a seemingly controlled market, I see the opposite playing out on a larger scale, with far greater definition. The neckline is not at 340 imo, it's at 300, and if this head and shoulders plays out, we're going all the way down to 250 before we find real support. Does this sound more or less likely than the bullish thesis? You have to decide for yourself guys.
I expect the Green line (resistance) to act a gravity today, pulling the price back down below, and possibly as low as the 50 Day MA, and 21 Day EMA, once again. As I mentioned before if those supports break, this whole thing is coming down like a house of cards. I don't see us closing above the Green line resistance for a second day in a row. This would mean a weekly break of the Green line, which is a tough feat for the bulls.
Good luck today guys, thanks for your time, and I hope everyone has a fantastic weekend! Cheers, Michael.