A Trade on the S&P 500 & SPY

Here's where we're looking to buy the dip (for a trade).

Technical Edge — 

• NYSE Breadth: 66% Upside Volume

• NASDAQ Breadth: 79% Upside Volume

• VIX: ~$22

We are seeing what happens when too many traders get too far offside on the short side. Combine that with portfolio managers and hedge funds that are underwater this year and you get what we’re seeing now: A vicious bear-market rally. 

I don’t know how or when this one will end, but these types of moves can induce incredible pain for those that are short. First they torture the longs with the fast and relentless declines, then they flip over to the shorts and give them a taste of it too.

The larger trend is still to the downside, but that doesn’t mean this upside move doesn’t have any juice left.

If we zoom out a bit, the 50% retracement of the 2022 range is at 4223 on the ES. That’s about 60 handles away and could be an area of interest for the longs. On the SPY, that’s ~$421.

Game Plan: ES Futures, SPY, NQ Futures, QQQ, CHNG, O

We’ve had a nice move since last week’s low, up over 6%. However, we have really lacked the upside breadth that shows a true return of demand. 

As noted above, this does not mean the S&P can’t go higher. However, it is something we’ve taken note of if and when the market switches gears. 

O

O is also from our list of individual stock trades from earlier in the week. 

The dip to the 10-day is wavering at the moment, but if we get a dip into the $70.50 to $71 zone, take notice. That is the minor breakout zone and the 21-day moving average. Holding this level on a dip could give us a nice bounce, IMO. 

A Trade on the S&P (ES and SPY)

The first chart is a look at the ES futures and the second chart is the SPY, depending on which one you prefer to trade. Instead of the usual “bigger picture” look, let’s look at a shorter-term setup today.