Tackle Today: Stiff Resistance
July 19, 2022
«Don’t Chase Longs.»
Traders,
Monday’s movement was an old fashion gap and crap. Prices popped out of the gate, ushering SPY directly into overhead resistance. Had we finished in the green, it would have marked the third daily gain for the index. But it wasn’t meant to be. Those who chased longs at the open learned the risks of deploying new bullish positions in front of resistance anew.
By day’s end, the S&P 500 lost its gains and closed deep into negative territory. An ominous bearish engulfing candle now looms large. Resistance at $390 ($3,900 on SPX) has held firm for the third test. It’s proving a hard nut to crack, and until we do, it’s difficult to get overly excited about bulls’ chances. There is a silver lining, though. The market is undeniably spotlighting the level that needs to be broken. And it allows traders to make some nice low-risk trades with quick exits. For instance, bears might bet on resistance holding with a tight stop over $390. Bulls could buy the breakout with a tight stop below.
Video Of The Day: What is the difference between Swing Trading and Position Trading
Watch this clip from the Halftime Report where the Coaches explain the difference between swing trading and position trading.
Chart of the Day: S&P500 ($SPY)
The more we test a level, the stronger it becomes. And the more significant the eventual breakout. $390 is the magic number for SPY.
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