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Assessment: Markets are tanking, but the good news is that this pullback will create some excellent buying opportunities. The key question is: will those opportunities emerge at current levels, or slightly lower? The volume today, as can be seen in the chart below, was INCREDIBLY HIGH…possible sign of capitulation and at least a short-term bottom at this level.
Here’s the current SPY chart: https://sblk.io/s/xeyeSXTPTACPuLn
I’d expect to see some support around the $500 level in SPY—it would be unusual not to get at least a bounce there of some size. That said, I do believe there’s still room to move lower; the real question is how low…and when.
Based on the algorithm’s calculated pivots, if support doesn’t hold at the round number ($500), the next key level for a potential bounce is $494.18. If that level fails, the next material support doesn’t show up until $469.56—and I’d be a long-term buyer if we reach that zone.
A move near $494 would likely be a short-term or swing trade for me, as I still see a possibility of further downside ahead.
Let’s see how price reacts if and when we test $500 in SPY. We’re close, but haven’t quite touched it yet. If I were holding a short position from the pivot break, I’d be trailing my stop down to around $525 at this point.
Have a great weekend!
Good luck in your trades!