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Assessment: Key round number support in SPY held yesterday, and we have the 200 day simple moving average at $419.17. So, we have a good confluence of support in that area. The question is, despite that and the face we are short term oversold, do the bulls rush in?
Market crashes occur in oversold markets, not overbought markets. Crashes occur because people see selling, target an area for support, put all their chips on that support…and then that support breaks and they panic and run for the exits. Why? It is because what they expected to happen did not and they throw all their assumptions out the window and don’t know what to believe. At which point it is better to be in cash before it is too late.
So, does $420-$419 hold and provide a bounce, or do we blow through it and have a run for the exits?
Market crashes are a low frequency and probability event…but when they do happen, that’s where A LOT of money is made for bears.
Long story short…all eyes are on $419-$420 and how price handles that level.
Good luck in your trades!