Take Gains On SPY – The Chart Says It All

Posted 9:30 AM ET - The headlines have not changed much in the last few weeks. Russia’s war on Ukraine has prompted sanctions against Russia. Those sanctions are adding to inflation and the FOMC will reveal its interest rate policy in 10-days. Central banks have frozen the assets of Russia’s central bank and that has raised credit concerns. China has its own territorial ambitions and they are supporting Russia. Visa, MasterCard, Discover, Amex, and PayPal have ceased operations in Russia and according to Reuters; Russia is promoting China’s Union Pay as an alternative. According to the Associated Press, China has instructed media outlets to only air pro-Russian content. The PBOC has Russian assets and they are granting access to those funds. Europe said it is not going to impose energy sanctions against Russia and even if they did, China would gladly pick up any slack. Global markets were very weak overnight. Swing traders are long SPY at $430. We are going to exit that position for a small gain on the open this morning. I did not like the price action last week and the SPY chart is looking bearish. QQQ is in a “death cross” (50-day MA < 200-day MA). We will wait for volatility to settle down and that is not likely until the FOMC statement next week. I view the SPY $427.50 level to be significant. That horizontal support has been tested many times since last July. I also view the 200-day MA to be significant because the downward sloping trend line comes into play at that same level. Day traders should be patient on the open. The S&P 500 was down more than 100 points overnight and it has been able to recover most of those losses. Basic materials stocks (food, oil, coal, base metals, precious metals, fertilizer) have all performed well. Defense stocks (LMT, NOC, GD) are also performing well. Chinese stocks and tech stocks in general have performed poorly. Use sector rotation and RS/RW to your advantage. I have seen better (more sustained) price action on the short side. Pick your windows of opportunity and expect two-sided action. Support is at $427.50. Resistance is at $433.50 and $445. . .

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