Outlook
SPY may have one more leg down, but we think that would be a good opportunity to buy. The next big movement would be up.
SPY Today
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| SPY 5m |
SPY couldn't keep 5SMA level and had sold off in low volume. Once SPY broke 205 level, the volume picked up. Now SPY is hanging at 50day SMA level.
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| SPY Daily |
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| $NYAD |
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| $NYHL |
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| SPY:RSP |
Now SPY broke 50SMA level and at right neck level of H&S pattern. It's a textbook short entry level and that's why we don't like to short here.
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| $SPX CVI |
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| $SPX STVO |
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| $SPX VTO |
Both STVO and VTO are flat while CVI is under -1σ. We think short term rebound is imminent.
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| SPY OI 05/20 |
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| SPY OI 05/27 |
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| SPY DWV 05/20 |
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| SPY DWV 05/27 |
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| SPY Option Big Trades 05/20 |
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| SPY Option Big Trades 05/27 |
Open interest is skewed to put side. DWV chart is bearish as well. As noted above, SPY charts suggest there would be a text book short entry.
It looks like it's good time to short, but I would say it's too obvious. When there are many shorts with weak hands, the market gets vulnerable to the upside. That's why I don't buy chart patterns.
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