SPY Appears to be Exhausted, After Nine Weeks of Non-Stop Bullish Activity
SPY started week 10 of the current bullish thrust with a bang. Members took the opportunity to sell several positions into strength as we trade at resistance (281.00 +/-). Our plan is to take those profits and roll them into stocks that continue onward and upward. We also have a small hedge on SPY with 278P exipring Friday, should the 278-279 VBP support zone below give way to more selling.
As SPY drifted lower on Monday, Bollinger Bands started tightening. RSI is still above 50 suggesting price action should spend the majority of the time above the 20ma on this 60 minute chart.
TICK cumulative has spent the majority of the past 9 weeks rising, confirming institutions were buying more than they were selling as breadth expanded to more stocks. Breakouts were and continue to be numerous.
In addition, biotech, junk bonds and small cap stocks confirmed “risk on” status as investors sought higher returns in these bullish groups.
The game plan remains the same, now that we took profits and accumulated some additional cash. We’ll “watch” this morning to see where the strength or weakness is persistent. After the “opening range” we’ll look at potential trades. That said, we will not force any trades.
Watch the housing market today. In addition, CEOS from the Biotech and Pharmaceutical groups are in front of Congress today.
Futures are weak this morning, but not exagerated.
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