Is the bottom in for SPY, or is another sell-off coming? YES :P
Sooooooo....That hurt....(some of us, not so much others). My last technical call/idea (see below), that a descending triangle in DJI that had broken downwards on 3/20 would lead to a sell-off after the 3/21 Fed announcement was fairly accurate...Although I had no idea that it would be precipitated by crazy announcements about tariffs, trade wars, FB scandals, TSLA concerns, AMZN Trump tweets and the like. A crazy period of volatility has continued ever since the correction started early February (again, something else I called in my second idea). That being said, what's a person to do when the market starts acting like that last volatile bipolar ex-girlfriend you dated? Just settle in with your index fund ETFs for the long term and never hedge at all, Warren Buffett-style? Sell sell SELL, take your cash, and run to your bomb shelter? Throw all your money into FAANG stocks, QQQ, SPY after another major sell-off, thinking you're getting a bargain price?
First of all, this is not ANOTHER correction we are in, but just a continuation of the correction from early February 2018, as I understand it (>10% drop). Second of all, I'm DO think this is a temporary bottom and am (short-term) BULLISH now after this latest sell-off, for a few reasons:
1) Although SPY has technically closed below it's 50 DMA and 200 DMA (all bearish signs), both the CCI and RSI are indicating drastically oversold conditions...Which as you remember lead to a big buy-back and a TEMPORARY bottom around February 7th after the first drastic early February correction. I think it's about to happen again, just based on CCI/RSI conditions. We should see a confirmatory MACD positive cross and Moving Average Cross also soon.
2) A strong line of support for SPY at 257 (which represents November 2017 levels) is holding, for now...If this holds, I think we will see a short-term buy-back in SPY, QQQ, and ALL the FAANG stocks (FB, AAPL, AMZN, NFLX, GOOG, and even TSLA and NVDA...which combined represent >40% of the S&P 500). That being said, SPY MUST hold at 257 this week for my (short-term) buy-back theory to hold. Otherwise, I see the market and SPY sinking and continuing the harsh sell-off into bearish territory, with support lines at 247 (August 2017 levels) and 240 (June 2017 levels).
3) My theorized buy-back is only a temporary one, with big resistances in SPY at 268 (December 2017 levels), 272 (around the 50 DMA), and what looks like a small double-top around 278-280. I believe any buy-back may be limited to that strong resistance of 278-280. With the new potentially very positive earnings season upon us soon, there are a lot of positive tailwinds for some oversold FAANG and other SPY stocks. Personally, I think AAPL and NFLX have the "least worst/least negative news" conditions and are safest for a buy back, but that's just a hunch based on their oversold CCI/RSI
My bet for the future? A "Buy the rumor trend (before earnings April to May) and Sell the news (after earnings May to June)" situation, and I think we will just see a huge volatility swing-range for the market for more weeks btw SPY 257 and 280...all the way until summer 2018. It's definitely not the time to sell if you haven't already, but also not the time to invest ALL your money in. For sure hedge against downside if you buy right now (e.g. enter small positions, buy protective puts, hold cash, etc). Good luck to everyone...I think our crazy volatility-laden ex-girlfriend SPY market is here to stay for awhile!
(DISCLAIMER: I'm mostly cash now, but have a small call position in QQQ, NFLX, and FB, and may take a bullish position in DIA, SPY, AAPL, TSLA, and/or NVDA soon. These are just my opinions, I am definitely not a professional analyst or trader, and all investment carries risks. As everyone knows, it is very difficult to time the market. Do your due diligence and examine risks and don't base your market decisions just on my analysis)
First of all, this is not ANOTHER correction we are in, but just a continuation of the correction from early February 2018, as I understand it (>10% drop). Second of all, I'm DO think this is a temporary bottom and am (short-term) BULLISH now after this latest sell-off, for a few reasons:
1) Although SPY has technically closed below it's 50 DMA and 200 DMA (all bearish signs), both the CCI and RSI are indicating drastically oversold conditions...Which as you remember lead to a big buy-back and a TEMPORARY bottom around February 7th after the first drastic early February correction. I think it's about to happen again, just based on CCI/RSI conditions. We should see a confirmatory MACD positive cross and Moving Average Cross also soon.
2) A strong line of support for SPY at 257 (which represents November 2017 levels) is holding, for now...If this holds, I think we will see a short-term buy-back in SPY, QQQ, and ALL the FAANG stocks (FB, AAPL, AMZN, NFLX, GOOG, and even TSLA and NVDA...which combined represent >40% of the S&P 500). That being said, SPY MUST hold at 257 this week for my (short-term) buy-back theory to hold. Otherwise, I see the market and SPY sinking and continuing the harsh sell-off into bearish territory, with support lines at 247 (August 2017 levels) and 240 (June 2017 levels).
3) My theorized buy-back is only a temporary one, with big resistances in SPY at 268 (December 2017 levels), 272 (around the 50 DMA), and what looks like a small double-top around 278-280. I believe any buy-back may be limited to that strong resistance of 278-280. With the new potentially very positive earnings season upon us soon, there are a lot of positive tailwinds for some oversold FAANG and other SPY stocks. Personally, I think AAPL and NFLX have the "least worst/least negative news" conditions and are safest for a buy back, but that's just a hunch based on their oversold CCI/RSI
My bet for the future? A "Buy the rumor trend (before earnings April to May) and Sell the news (after earnings May to June)" situation, and I think we will just see a huge volatility swing-range for the market for more weeks btw SPY 257 and 280...all the way until summer 2018. It's definitely not the time to sell if you haven't already, but also not the time to invest ALL your money in. For sure hedge against downside if you buy right now (e.g. enter small positions, buy protective puts, hold cash, etc). Good luck to everyone...I think our crazy volatility-laden ex-girlfriend SPY market is here to stay for awhile!
(DISCLAIMER: I'm mostly cash now, but have a small call position in QQQ, NFLX, and FB, and may take a bullish position in DIA, SPY, AAPL, TSLA, and/or NVDA soon. These are just my opinions, I am definitely not a professional analyst or trader, and all investment carries risks. As everyone knows, it is very difficult to time the market. Do your due diligence and examine risks and don't base your market decisions just on my analysis)
