Chart Courtesy of StockCharts.com
- Bulls decided to exit the market Friday in mass on the highest volume since the two day Brexit move. There was no bounce, it was a gap down morning that never looked back.
- This move Friday was unprecedented for its speed and duration from what looked like a strong market. “Friday was the first time the S&P 500 has ever gone from within 0.5% of an all-time high one day to a new two month low the next day.” – Ryan Detrick
- Moves like Friday show how important it is to always be managing risk. Leverage and margin combined with stubbornness can blow up a trading account in a plunge like Friday.
- The MACD bearish cross continues and was one of the few warning signs before over the past few weeks before the Friday plunge.
- Slow Stochastics is under a bearish cross.
- ATR had a large spike which shows that this trading range has dramatically expanded for next week.
- $SPY price is now under all key moving averages except the 100 day and 200 day. The 100 day is converging near the 30 RSI and past resistance levels for a potential dip buying opportunity.
- The 32.90 RSI is almost oversold, the 30 RSI should provide end of day support for next week. An intra-day plunge below the 30 RSI with an end of day recovery could be a short term dip buy signal.
- The break so far under the Bollinger Band and extension under the 10 day EMA has stretched the rubber band of price so far the odds are that we have a meaningful snap back rally at some point next week.
- I will attempt to buy the dip around the $211 SPY price level, 100 day SMA, and/or the 30 RSI.