≈ Increasing Supply. ≈
Traders,
Here’s a pro tip on chart reading: The relationship between the last two pivots will tell you more about the short-term trend direction and momentum than anything else. Whether they’re rising or falling will reveals who’s in control of the trend. September and October have lived up to their volatile reputation. If you haven’t noticed, the market’s trend structure has changed. Look at the last two pivot lows and pivot highs.
Late-day selling yesterday pulled SPY down nearly 0.75%, resulting in the second straight lower pivot high. As much as I want to be optimistic about a fourth-quarter rally and bullish finish to the year, I simply can’t. The technical don’t allow it – not yet, at least. So for optimism to flourish, we need to stop this depressing pattern of lower pivot highs and lows.
If you’re wondering what we mean when we say that “rallies are suspect” in a downtrend – look no further than the past four trading sessions. On Wednesday and Thursday last week, prices were ripping higher, making some wonder if that was the bottom. And then, on Friday and Monday, prices fell right back down – handily rejected at the 50-day moving average.
Based on the near-term performance, it looks like the market isn’t yet ready to depart Bear Country.
#TeamTackle
Chart of the Day
SPY Lower High
Another leg lower has begun, and another lower pivot high is in place. Credit goes to bears for maintaining their dominance. Now the question is where the next pivot low forms. Will it be higher, equal to, or lower than the previous one ($428)?
Video of the Day
Onboarding With Coach Frank
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