On Friday we were rejected from the Bear Market Resistance Trend Line
for the 2nd week in a row and this market looks like it may roll over
and head down to retest previous lows with a very real possibility
Of fresh new lows. Every time we have seen this rejection from the weekly resistance
we saw at least Three weeks of heavy selling and oftentimes we did not get a big bounce, traded sideways and drifting down before any meaningful bounce helped the bulls, but it’s been short lived. The Daily Chart on SPY shows we can continue lower still. We finally filled that gap at SPY $381 on Friday and we closed very oversold. We do have Two gaps, the first is at $396 And then $387. If we dont bounce tomorrow look out below because there could be a lot of selling. There are not a lot of buyers out there at these levels. We could flush and come crashing down if we dont see buyers show up at the $381 zone then price action would suggest we go to $378 to $374 quickly. The good news for the is that if that does happen we will finally get capitulation. d get a strong bounce back into resistance. The weekly chart is much stronger then the daily chart so we could go lower, there has been high volume selling and weak bounces.. BUT…. If we instantly start seeing buyers today and we close the gap above we will need to get over SPY $390 and try to fill the gap at $396.If you look at the price action we are below all the moving averages Keep in mind we clearly got a rejection off that double top at SPY $408 and the Bears are looking to take us lower fast.
Trade safe and watch these important levels and have a great day!
G. Allan Collins