Here’s an intraday update on $SPY…
SPX has traded in exact accordance with my last technical appraisal from a couple weeks ago. The primary pattern governing this market is SPY’s daily LT H&S top, which has hit R shoulder resistance and is now descending toward neckline support @ 182 (-6.4%) — my base case target for this cyclical correction.
Now en route to that downside target, SPY is attempting to bottom early, with new, high conviction, bull reversal patterns being formed.
These patterns suggest the following SPY priceaction…
- 192.6 (-1.0% fm current)
R shoulder support of 15min ST H&S bottom
- 199.5 (+3.6% rally; +2.6% fm current)
R shoulder resistance of 15min LT fulcrum bottom
- 191.0 (-4.3% drop; -1.8% fm current)
neckline support of 15min LT fulcrum bottom
- 202.0 (+5.8% rally; +3.9 fm current)
R shoulder resistance of daily LT H&S top
At that point, the fate of this correction will be determined by whether or not that daily LT H&S top’s R shoulder resistance @ 202 holds or breaks. Since that would be the 2nd test of that resistance level and two gaps lay right above it (“gaps get filled”), it’s becoming increasingly likely that SPY can end this correction early.
There’s nothing to do in terms of rerisking/derisking the portfolio until we get confirmation. This bottoming process will take some time, conveniently aligning these chart technicals with seasonality, which will swing to a tailwind by the week of October 12.