Here are my final thoughts on SPY for the week of August 1st, after having run the calculations.
By the way, Happy August!
Predicted Trading Range (with the consolidation assumption assumed) is 421 - 398.
Meaning, if SPY just wants to consolidate, we should remain within this range.
IF, SPY wants to show conviction in either direction, then:
Break and hold above 421: Bullish conviction;
Break and hold below 398: Bearish Conviction.
Monday Advice:
I see some people posting losses on trying to short this so I will share my bullish and bearish breaks. Remember, these are the levels that I personally use to signal NOT to short or long a stock, if it breaks below these levels, probability is NOT in favor of a long position and vice versa. Doesn't mean you CAN'T be succssful with a short, but it just means your trades in the opposite direction should be succinct and more scalpy. These do not apply if you are a swing trader though.
Bullish break for Monday: Break Above 414
Bearish Break: Break below 408
Thoughts on Trading Range:
I just wanted to share something that immediately flashed in my mind when SAS gave me the range. That was 421 is a key math and technical level for SPY. And of course it got me excited. BUT! It also brought back some bad memories. If you remember (if you follow me you probably do) when the math was saying the bullish break for SPY was calculated to be 420 the next day? And I posted all energetically and super pumped that SPY was going for it?
And you remember what happened that day? 420 was not reached. In fact, SPY tanked. It absolutely friggin tanked. In fact, from there it essentially went straight down right to the 380s and below. It got me all hot and bothered and then made me get everyone else hot and bothered and than pulled the rug out. I remember it well because losses were had that day because I completely ignored the downside targets the math gave me and was so fixated on the bullish target.
ALSOOOOo.... SPY has broken out to the upside of the trading range these past 2 weeks and affirmed bullish conviction. This is kinda rare. Even for 2021 this was kind of rare. Do we think its going to break out and hold a THIRD time? Maybe, its absolutely possible. If this is a strong bear rally, then its really really possible. But caution is needed because:
1. RSI is running hot on pretty much all major time frames;
2. Short interest is growing;
3. For SPY to be reaching these levels there is probably a lot of big money HODLing that are probably itching to press the sell button to take profits, especially at any sign of weakness.
My overall thoughts:
Its all just a giant nightmare honestly. Those are my overall thoughts. I have no biases for tomorrow, I will play the PA per usual. But I am inclined to look to that 416 - 418 range because that is the stronger resistance area. If I see strong rejection there, I would be inclined to hold a short position in anticipation on a complete failure of the 421 target WITH the knowledge that SPY could circle back and hit 421 at a later date.
These were my immediate thoughts I wanted to share. I think in general the cautionary message is be careful if you are overly long biased on this, for the sole reason that technically SPY is quite over-extended at this point and, I am not really ruling out SPY going hugely higher, its quite possible, I just think it logically needs pullback.
But logic is a thing of the past in 2022, so wth do I know!
Trade safe everyone!
Leave your comments/questions and critiques below!
Thanks for reading!
By the way, Happy August!
Predicted Trading Range (with the consolidation assumption assumed) is 421 - 398.
Meaning, if SPY just wants to consolidate, we should remain within this range.
IF, SPY wants to show conviction in either direction, then:
Break and hold above 421: Bullish conviction;
Break and hold below 398: Bearish Conviction.
Monday Advice:
I see some people posting losses on trying to short this so I will share my bullish and bearish breaks. Remember, these are the levels that I personally use to signal NOT to short or long a stock, if it breaks below these levels, probability is NOT in favor of a long position and vice versa. Doesn't mean you CAN'T be succssful with a short, but it just means your trades in the opposite direction should be succinct and more scalpy. These do not apply if you are a swing trader though.
Bullish break for Monday: Break Above 414
Bearish Break: Break below 408
Thoughts on Trading Range:
I just wanted to share something that immediately flashed in my mind when SAS gave me the range. That was 421 is a key math and technical level for SPY. And of course it got me excited. BUT! It also brought back some bad memories. If you remember (if you follow me you probably do) when the math was saying the bullish break for SPY was calculated to be 420 the next day? And I posted all energetically and super pumped that SPY was going for it?
And you remember what happened that day? 420 was not reached. In fact, SPY tanked. It absolutely friggin tanked. In fact, from there it essentially went straight down right to the 380s and below. It got me all hot and bothered and then made me get everyone else hot and bothered and than pulled the rug out. I remember it well because losses were had that day because I completely ignored the downside targets the math gave me and was so fixated on the bullish target.
ALSOOOOo.... SPY has broken out to the upside of the trading range these past 2 weeks and affirmed bullish conviction. This is kinda rare. Even for 2021 this was kind of rare. Do we think its going to break out and hold a THIRD time? Maybe, its absolutely possible. If this is a strong bear rally, then its really really possible. But caution is needed because:
1. RSI is running hot on pretty much all major time frames;
2. Short interest is growing;
3. For SPY to be reaching these levels there is probably a lot of big money HODLing that are probably itching to press the sell button to take profits, especially at any sign of weakness.
My overall thoughts:
Its all just a giant nightmare honestly. Those are my overall thoughts. I have no biases for tomorrow, I will play the PA per usual. But I am inclined to look to that 416 - 418 range because that is the stronger resistance area. If I see strong rejection there, I would be inclined to hold a short position in anticipation on a complete failure of the 421 target WITH the knowledge that SPY could circle back and hit 421 at a later date.
These were my immediate thoughts I wanted to share. I think in general the cautionary message is be careful if you are overly long biased on this, for the sole reason that technically SPY is quite over-extended at this point and, I am not really ruling out SPY going hugely higher, its quite possible, I just think it logically needs pullback.
But logic is a thing of the past in 2022, so wth do I know!
Trade safe everyone!
Leave your comments/questions and critiques below!
Thanks for reading!
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