...or is it resistance?
Looking for support in a strong momentum move can be pretty straightforward (so long as support holds ;). What we had to go on in today's SPY sell-off were prior consolidation ranges, between $117.50-$119 (Resistance-becomes-Support). After having potential targets in mind, it becomes a matter of watching for selling exhaustion (TICK divergences and higher lows within your target boundary).Here's a look at the SPY daily price congestion ranges
Here's a look at the volume profiles, showing the primary congestion range
What's really interesting is the following monthly chart of the SPY. The $119-$120 level (where we found support today) coincides with a mid-point of the S&P500 going back 12 years.
Also interesting is how the above chart looks a lot like the one below...so, is the current phase finished, or only half-finished? :)
The QQQQ closed the week just under the $50 mark:
One further observation;
The Dow closed just barely above the 11,000 mark. Take note of how long price has previously bounced between the 10,000 and 11,000 levels before:
Sept. '01 - June '02
Dec. '03 - October '04
Here's a look at the volume profiles, showing the primary congestion range
What's really interesting is the following monthly chart of the SPY. The $119-$120 level (where we found support today) coincides with a mid-point of the S&P500 going back 12 years.
Also interesting is how the above chart looks a lot like the one below...so, is the current phase finished, or only half-finished? :)
One further observation;
GS sits on top of a long running Support/Resistance pivot
FCX printed a shooting star on waning momentum
Looks to me like a complex Head & Shoulders top in XLE. What I like here is how price is wedged between a short & intermediate Moving Average that looks to be crossing in a bearish way. Also, the momentum oscillator is correcting into the slow line (think; momentum, pullback, extend).
Now take a look at the range we find ourselves in:
SPY- While this one is looking like a H&S pattern with a measured move, again, back to the lows of this range ($115-ish).
and zoom in a little closer
Perhaps it could bounce from here after hitting lows last week not seen since March '08. However, this stock has been under the thumb of the 200-MA for nearly two years now, and while bounces out of the $64-range have been common, they're not drawing as much buying as they once did. It will be interesting to watch what develops.
Here's where we stand for now
We came close to closing in a Hammer candle today, and though the volume wasn't as strong as this issue has seen in the past, it was reasonably high today, with a big order coming in to rescue it from the abyss. Watch the follow-through develop from here to see what kind of a bounce this order manifests. Direct overhead resistance at $25, support now at $23.
It could make an attempt for $28 if it can get the momentum behind it (not a necessarily favorable risk:reward ratio), but it will obviously be affected by any news that may come up.
