SPY surged over the last three days, but the last three candlesticks show hesitation that could foreshadow a test of last week's lows. Looking back at November, we can see a gap and then a test of the mid November lows with a pullback later that month. The convincing surge in early December featured a gap off support and three white candlesticks. Candlesticks are white (hollow) when the close is above the open, which indicates sustained buying pressure throughout the day. SPY closed below 136 with a long black candlestick four days ago and then surged the last three days. However, this 3-day surge featured an indecisive black candlestick, a rather long black candlestick and a small white (star) candlestick on Monday. Despite a move from 125 to 130 over the last three days, post-open price action was not inspiring. There was no follow through on the first strong open (1), a decline after the second strong open (2) and weak follow through after Monday's strong open (3).
Key Economic Reports/Events:
Tue - Mar 22 - 10:00 - FHFA Housing Price Index
Wed - Mar 23 - 07:00 - MBA Mortgage Index
Wed - Mar 23 - 10:00 - New Home Sales
Wed - Mar 23 - 10:30 - Crude Inventories
Thu - Mar 24 - 08:30 - Initial Claims
Thu - Mar 24 - 08:30 - Durable Orders
Fri - Mar 25 - 08:30 - GDP Estimate
Fri - Mar 25 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday in separate post.
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This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
