Thursday, May 26, 2016

May 26 - Pause before the breakout to 220 SPY?

We are super overbought and due for some kind of pullback/ pause for a few days to a week.  More importantly, SPY is right up against major resistance and if it breaks, I think we have a good chance of seeing 5%+ upside this summer.  I am having a hard time wrapping my head around it but the tape is so stubbornly upwards.  I am currently short as of today but not planning on holding long, the longest through Tues before Jun 1 which could see the start of a new leg up.

the hourly is really overbought and still holding up pretty strong.  3 unfilled gaps!  And within a very short time frame.  Usually after two you usually see some pullbacks but even today held.  To me this indicates a serious bid under the market.

I keep thinking about how much doubt there was and chatter about a H + S pattern recently.  It failed miserably and reminds me a lot of 2009 when we had similar sentiment which led to a solid 3 mo rally and more.

 Again we have a strong move off a low and roughly the same time period, about 2 mo then a lot more upside.

 The 2 hr printing an RSI sell signal
 Low volume in daily very close to triggering a sell
 2010-2012 saw two big corrections and breakouts.  There was often a 'knuckling' or pause (indicated in blue) before things broke out.  And when they did it was a straight line.
 After the big correction we had a multiwave breakout
 2015-2016 have shown a much bigger and lengthier slowdown.   If the move up is proportionate, it could be a huge move.

No comments:

Jun 12 - Sold $GOOG, $AMZN, $MARK, $IGT calls expiring this week, added July $GPS, $AAPL puts and $GLD calls

Lightening up today and yesterday a lot and have some of the holdings as puts. $FDX getting closer to retesting highs. $SPY close to 2...