Diary of a Financier

SPY update: Bounce off support with target @ 201.8

In Capital Markets on Wed 24 Feb 2016 at 18:09

On the heels of the outlook we posted yesterday, SPY has traded in perfect accordance with the technicals discussed therein. Here’s an update as of today’s close…

In real time this morning, we again nailed  SPY’s bottom…

$SPY @ 189.5 support, expect bounce…
1min 1x bull divergence

$SPY 190.3 & quickly bouncing…
1min fulcrum bottom w 2x bull divergence
10:37 AM

That bottom arrived right at the 3rd support highlighted yesterday.  SPY continued to rally from there, ending today @ 193.2 (+2.0% fm intraday lows).

In terms of headwinds going forward, not onlySPY 15min & daily 2016.02.24 has a 15-min diamond top now developed in SPY, but also that daily triple-headed resistance @ 195 awaits a second bout. Nevertheless, daily 1x bull divergence the broader current from the daily chart should overwhelm it, as mentioned yesterday

“[a bounce off intraday support] should set the table for a rally up to the real interim target: SPY’s daily support-cum-resistance level (SPY @ 200, +3.6% fm current).”

Accordingly, our base case in the short-term follows that gameplan, refined into the following resistance levels & target…

1st resistance @ 195 (+0.5% fm current)
→ 50 DMA
→ 2x classic resistance
→ R shoulder of daily ST tilted fulcrum bottom

2nd resistance & target @ 201.8 (+4.5%)
→ 200DMA
→ Support-cum-resistance fm gap-down (1/4)
→ R shoulder of a daily LT classic H&S top
→ Weekly 2x bear divergence

3rd resistance @ 203.9 (+5.5%)
→ Support-cum-resistance to fill-up gap (12/31/15)

Our longer-term outlook remains the same: NEUTRAL.




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