The Federal Reserve Chairman had a lot to say about unemployment, rates, and dot plots, while the market reaction was swift. Futures markets are lower (-2.72%) across the board.
Summary
SPY Daily Levels
The S&P500 SPY ETF is lower this morning (-8.35 pts/-2.60%) trading near 310.72 (+/-), as futures search for support.
Blue and red arrows are support zones at the 9ema and 21d respectively. The market has rallied for 4 weeks having cleared the 292.00 (+/-) zone, so a 3%-5% pullback would help reset the markets as stocks have become overbought. MACD is still above its signal line, showing bulls are still in control. RSI is overbought territory.
The 9ema above the 21d, 50d and 200d moving averages. SPY is currently below the 9ema, so we are anticipating a test of the 21d and a gap fill for starters.
We are looking for a few scenarios.
- SPY bounces immediately and fails
- SPY continues lower closing at the low of the day.
- SPY rallies off the low and closes at the high of the day. (unlikely).
SPY Weekly Levels
There is major support below 302.00 (+/-), while RSI remains above 50 and rising. MACD shows bulls are in control, so a test of this area would be a break of the 21d in the daily chart above. A hammer there would make sense if the bears cannot take control from the bulls.
Top Absolute Gamma Strikes to keep in mind.
- [3300, 3250, 3225, 3200, 3175, 3150, 3100, 3050, 3000, 2900]
- Zero gamma is presently at 311.00, so we might see some support in this area today and tomorrow.
We’ve had 4 really profitable days, selling into strength, so we will wait for the markets to confirm direction before putting that money back to work.
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Happy Trading,
Vinny
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