Get Right … Sit Tight
Yesterday’s upside failure (from Monday’s reversal) tells us it’s a very dangerous market environment.
The ‘rebound’ that Maverick discussed (second link, above) may have been on Monday and that’s all there was.
Absolutely nothing against him in any way.
If that was it for a bounce, we’re indeed in a very dangerous (to the downside) situation.
The S&P got itself into a Wyckoff Up-Thrust condition, noted here and shown on the daily chart below.
S&P 500 (SPY), Daily
It’s about midway through today’s session.
We can see SPY price action grinding its way down to support near the 410 – 415, level.
Up-Thrust, headed for ‘Spring’ ?
We already know from empirical observation that markets tend to go from spring to up-thrust.
Does it work the other way around … up-thrust to spring ?
From a personal standpoint, I do not have any data to show that behavior exists.
However, with SPY in its current position (near support) we may be about to see if there’s penetration and then attempts to move higher (i.e., in spring position).
The chart below shows current support.
There would need to be decisive penetration to set up the potential for any kind of sustained rebound.
The blue line is a significant support level.
The grey line just above, is also support, where price action is at the moment.
Penetration of either one sets up a spring.
Real Estate, IYR (Daily)
While the S&P fights it out at support, real estate, IYR is doing the same thing.
The previous post was looking for new highs in the sector.
At that time, it looked to be 50/50, odds of doing so.
Now, we’re right at the danger point.
It won’t take much for price action to confirm a spring or a break to lower levels.
It looks like we’ve already had an up-thrust which seems to point probability lower.
With the overall markets, the S&P at support now and deep oversold, points the opposite way, probability to the upside.
IYR had a shallow, 38% retrace during yesterday’s session before continuing lower and closing near the low of the day.
As that retrace was completing, a short position was opened via leveraged inverse SRS (SRS-22-01) and the stop set at yesterday’s IYR high of 109.58 (not advice, not a recommendation).
As this post is completing, IYR price action’s laboring to move higher (SRS, lower).
We’ll know soon enough if we’re in a breakdown or a spring.
Charts by StockCharts
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point®, trade mark: No. 6,505,279