I have no idea where the market goes from here. It’s impossible to ignore inflation and the already slowing growth environment. On one hand, the employment numbers are still strong and corporate earnings expectations haven’t fallen off the cliff. On the other hand, inflation is not under control, confidence numbers are quickly retreating and the macro view beyond the U.S. is troubling, especially in Europe.
Because of all of the macro clutter, I’m going to ignore the data and focus on charts instead. What does it tell us and are there any long-side opportunities?
SPY isn’t telling us much. It’s possible to conclude that we’re finally consolidating and a bottom is in. It’s a realistic interpretation. However, SPY is still in an overall downtrend and the volume isn’t showing significant bull confidence. We’re not there yet. The area I have highlighted in the yellow box is interesting to me. I don’t anticipate that it’ll push through there anytime soon. It would take a significant market change like an end to the Ukrainian war or an unexpected drop in inflation. One observation that may be actionable is how often the intraday candles are hollow. I might put some day trading capital at a break long of the morning highs and sell at the close. I expect SPY to revisit 385 this week, but hold above. If it drops below, expect more selling pressure.
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