So after the last few trading sessions melting upwards in thin volume it doesn't take much to reverse and plow through that thin volume. But, today's selling was light, and also thin volume. If you were just going off the charts it does show that we had a daily reversal and then pivot confirmation from Friday. Today's daily ended just below the long term trend line i noted in my last few posts. On the intraday we hit the .5 fib retracement on the nose and then finished basically at the lows of the day with what i see as a short cover rally there at the end. In SPY we filled the gap, but in the SPX we did not. Keep that in mind. That is bullish. BUT, on the other hand we did have an impulsive break down from an ascending wedge as well. And on top of that we went up and tried to retest the trend line. We did retest the former breakout area around 320 on SPY which was a retracement target i had.
Now obviously this could go one of two ways. I see us either gapping up tomorrow morning and trapping everyone who was frothing at the mouth to go short or gapping down either into or through the gap on SPX and into the 320 resistance area on SPY. IWM did not show as much sell strength and actually was at it's 100 period average volume, which could be a leading indicator. It hit the top of a previously broken trend line and bounced directly off of it after printing a reversal candle Friday.
I'm 90% sure this pullback is just that, a pullback. It's most likely people taking profit or re-positioning. If we do break or gap down below $320 expect a test of the gap around $317.50. Also, don't get sucked into this. Just like a lot of traders are trapped at the tops of stocks like TSLA and AMZN this could turn right around and rip your face off once institutional money gets back in the driver seat. This is all barring some huge macro event like the trade deal or repo markets blowing up and if that's the case we have a completely different story on our hands.
This is not trading advice. All of this is based off of TA and should only be construed as opinion.
