G. Allan Collins
8/10/23
8:30 AM
Good morning, traders and investors,
I hope you all had a fantastic weekend and are ready for an exciting week ahead. Let’s dive into the market action and explore some potential opportunities to make money.
Last Friday, the SPY showed impressive resilience, closing up 0.98% at $456.92. However, the real question on everyone’s mind is whether we are on the cusp of breaking the $460 mark and continuing the FOMO (Fear of Missing Out) and short covering rally. The markets faced a setback after Thursday’s key reversal and bearish engulfing patterns, but Friday’s bounce off support offered a glimmer of hope. Yet, we couldn’t manage to break Thursday’s high, and now we face critical resistance at $460.
For traders with short positions, it might be wise to consider covering them if the SPY breaks above $460. This level is crucial, as closing above it could trigger further short covering and fuel the FOMO-driven rally. However, if the SPY closes below $453, it could signal a more significant shift and present an opportunity for short traders to hold their positions. It’s essential to keep a close eye on SPY $460 as it will likely determine the market’s direction in the near term. If we surpass this level, the bullish momentum could continue; otherwise, we might see a sharp and fast selloff of 10%-15%.
Turning our attention to the Triple QQQ, it had a notable gain of 1.82% on Friday, closing at $383.48. Critical resistance lies at $387.98, and for short traders, the risk-reward seems to favor the bearish side. Staying short could be a reasonable strategy, especially if the QQQ closes below $380, which might signal a potential downward trend.
As for the DIA, it closed up 0.48% at $354, with critical resistance at $357.66. If short sellers continue to cover their positions and FOMO kicks in, it might be tempting to stay short. A 10%-15% correction could be looming on the horizon, so caution is advised.
In conclusion, the market is at a critical juncture, and traders need to keep a close eye on the $460 resistance level for the SPY. Depending on how events unfold, we could see a continuation of the recent rally or a swift correction. As always, careful risk management and a keen understanding of the market dynamics are vital for navigating these uncertain times.
Wishing you all profitable trades and successful investment decisions.
Cheers,
G. Allan Collins
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