Are you watching the Fib levels on the S&P? – August 15, 2022
SPY SSO
I want to talk about the SPY ( NYSEARCA: SPY ) here and this is why. A few trading days ago, last week, you will notice this was on last Wednesday, the 10th, that this was right up against this green dotted line. If you go over there it’s 50 percent. This is a 50 percent retracement, it’s a Fibonacci figure. From the last high, this big high here and then big low.
We can look at these Fibonacci retracements as a way to quantify the strength of any bounce. And so here, this is up 50 percent but this is where it is struggling. By the way, you will notice it kind of struggled here as well. Back here it looked like maybe for a while this might be all that this stock, or here the market, is going to fall down but instead, it kept going.
The most important thing, though, is you don’t really look at this stuff on the way down because you don’t know whether it’s going to continue to go down, you’d draw different Fibonacci lines. But here we’ve got this pretty well intact. And so when this is right up against the 50 you would expect it to pull back.
Well, it didn’t do that for more than a day. It gaps up here and then trades back below and ultimately closes below this 420.92 figure. You can’t really see it here but you can trust me, $420.92 is where the 50 percent retracement is. So this was a bit lower at 420.00.
The very next day, boom, you get this. Now, after this kind of day you would expect, if you are an index trader, you’re short, you are looking to sell this. Instead, boom, this moves higher, it doesn’t even come back to retest the 50, it just gaps up and keeps going.
The reason I am telling you this is because this is a great indication, and it’s really strong evidence that there are still buyers out there. There are still buyers, we get another strong day today. Now, I am not saying that we are never going to get a pullback.
What I am pointing out is, that this is the 8-day exponential moving average, this goofy-looking dark yellow line here. And so as long as the S&P is trading within this range, above the 8-day exponential moving average, this is a trend that is unquestionable. You just can’t question it, it’s trading above the 8-day moving average.
Now, if it starts drifting sideways, then it’s in question. Then you have to look at this resistance line and say, maybe we’re going to get more of a pullback. But for now, this is a stock, this is a market, this is an ultra ETF ( NYSEARCA: SSO ) and we are trading this. It is an ultra ETF that you want to be long. This was something that I got into right as it crossed the 50, we’re up almost 19 percent on this.
It’s a bullish market right now. We’re in a bear market rally, it could reverse at any time. But I can’t predict that and neither can anybody else except the fools and the liars.
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