Good Morning,
We had another wild ride on wall street yesterday with SPY closing down .94% to close at 438.64 below the critical support at 442 and we are now breaking out of this consolidation wedge to the downside. We should see 436 and if we can’t hold 436, we should go down to 430 which is Critical support. Nothing goes straight down or up so Once we get a bounce then we’re likely going to fill the gaps around 447 and 455. There is a gap at 423, So it is possible things get a little bit lower than We expect to see at 430, but if we break 430, that is going to look extremely bearish on the weekly chart. So right now, I still think there’s a good chance we hold support at 4:30 assuming of course that we do break that support at 436. Now keep in mind nothing moves in a straight line and we are getting close to the lower Bollinger Band. So even if we go hit 436, it’s still possible we bounce back up towards resistance before we go down and hit 430. So just because we’re breaking critical support at 442 does not mean to blindly short. There’s still going to be plenty of opportunities to buy at support and sell at resistance. But do keep in mind the path of least resistance below 442 will be that path towards 430
On the NASDAQ 100 QQQ we were down 1.44% yesterday and the triple Q’s also rejected that resistance at 370 which was the critical support breakdown and we had the clear breakdown below the 50 EMA today. So the next critical support and the triple Q’s below 370 will be the test of this support trendline and the previous low in August. Which is right around 361. So below 370 we’re looking for 361. If we break 361, we’ll be looking for 355, and if we break 355, we’re looking for 347. Follow the trend in the path of least resistance. Below 370 will be lower, which means even if we get balances to lower highs, we’re still looking for lower lows afterward. Until we break out of this downtrend this is why you always want to know where your critical levels are because this price action is defining your trade plan and now that we’re below 370 price action is doing all the talking.
We are Still Long The NVDA Puts and it looks like we will sell on the bounce.
Have a great trading day.
Cheers,
G. Allan Collins.
