Tonight, I am going to focus on the indices because the month of July is going to heavily depend on whether we get an everything rally.
SPY is already starting to break out and we just need to see price holding above this level at $442, and then we should start climbing higher towards $448 up to about $450. Now don’t forget we have this huge gap to fill to the downside right around $438 and I think there’s a good chance we do fill that gap. So, in the month of July, if we are going higher, it is very possible we go lower to fill the gap before we go higher and put in another higher low above that support level right around $438, which is also the rising 20 daily moving average. Now if we come down and fill that gap and we breakdown through it, then you’re looking for support to hold right around $436. Otherwise, we are coming back down to retest the breakout right around $429. If we break 429, we’re likely getting a deeper correction and the next likely target will be the gap flip $423. So, in SPY, manage your risk right around $436, which is critical support. And the breakout of resistance at $442, above $442, we’re looking for the higher, high right around $440 and below $442 we’re looking for the gap at $438.
This is a very low volume week because it is a holiday week. So, a lot of the price action this week is going to be very muted and very flat until we see that volume coming back into the market. So, I do expect a lot of the fireworks to occur next week and not this week because I just don’t think we’re going to have the high volume we need to get a big move in this market until we see people coming back from the holiday. So, know these critical levels and start developing your trade plan.
NASDAQ 100 to Triple Q’s which was flat for the day, which is exactly what I would expect to see in a holiday Week and we’re sitting right at Critical Resistance, which is right around $372. Now on the triple Q’s we saw the big tech sector leading the way higher and they are the sector that is most likely due for a correction. So, watch that Critical Resistance at 372 and the gap fill to the downside just below 365. That gap fill of support is going to be very critical because if we break below that gap. We’re likely coming back down towards $355 or $347. That is likely where we’ll have critical support and I think there’s a good chance we are still going lower to $355. But if we start breaking above $372, we instantly need to become more bullish because above $372 we are likely going to continue this bull trend, which means we are likely going to start climbing towards the $390s. Now I don’t think we’re going straight to the 390s just yet. I think we are going to see that correction first. So be very cautious if we start to see selling and it’s on high volume, we’re looking for critical support to hold up right around $365. And then if we start breaking below that, we are instantly looking for a deeper correction down towards $355 to $347. So those are your critical levels in the triple Q’s. And keep in mind big tech could have a lot more downside due to needing a correction. Even though we are still going to follow the price action in the chart, it is something you should be aware of.
The Dow Jones we were down .37% today closing right on top of the five-day Moving Average and we have that gap to fill right around $341.39. The Dow Jones needs to break above $346 to continue this bull trend and We should start marching higher towards $353. Now if we start to see all the indices breaking out to higher highs, then we are likely continuing the bull trend and going to higher prices. But if we continue to see strong resistance around these double top looks and on the Dow Jones that is right around $345, it is possible we do come all the way back down towards critical support. So, in the Dow if we breakdown below $341 we are looking for a trip all the way back down to $336.
The Russell 2000 IWM ETF, was down 1% today and the critical resistance on the IWM ETF is right here at $188. The small caps could be the next ETF getting ready to run, but that is going to require the price action breaking that resistance at $188. And then I am looking for a trip higher towards $195. So, we’re instantly more bullish if we break above $188 and we’re likely in a trading range between $184 and $188 until we get a breakout. If we break out to the downside.
The VIX, this is one of the main reasons I think we could be due for a correction because the VIX is showing very low. Volatility down here below 15, but we have been coiling up between 13 and 15 and usually when the VIX starts to coil up, you are about to get a very large spike in volatility. So, while I cannot guarantee this is going to happen, we need to see the VIX above 15 to tell us we are getting that spike in volatility and then I would instantly expect a deeper pullback. Or correction, as the VIX starts spiking out, and I do think the VIX is going to reach between 18 and 20, it may go higher than that, but we need that break above 15 to confirm it. And that will be the energy getting released from the VIX from coiling up in this tight range. And the VIX has been very suppressed for the majority of the year, I think July could surprise a lot of people and catch them off guard. If we see that correction this month. So, pay attention to those critical levels I gave you on the indices and pay attention to the VIX. Because I think if you combine the price action with the VIX and you pay attention to these critical levels, you’ll know exactly how to trade in the month of July and you’ll have very good risk reward setups. So, as I said before, this is just a short update because I want you to be aware of these critical levels. Just in case the move starts happening this week and we still do have two more trading days, so anything is possible
TSLA got the Heisman right at critical resistance if we fail and head lower tomorrow, actually it is 1am so I should say today, if we fail next support is $275.06 and then $272.52. Resistance is $285.02, $287.56 and $291.27. Happy Trading!!!
G. Allan Collins