SPY Charts 6/7 SPY About To Swing Low

I am going to focus mainly on the technical break downs on the SPY Chart today.  We tend to get ahead of ourselves when there is a big bump in the market like we've had the last few days.  We start to get that feeling the bulls have returned and everything is right with the world with out thinking that since the beginning of May the rallies have met with selling.  I do have to admit if we had traded up today that I would have gone with the crowd in thinking that, but that didn't happen tby he end of the day there was a selloff and the SPY didn't gain anything.

Lets take a look at the chart because I believe it speaks volumes about where we head tomorrow and Monday. 

1.  The rally we have had over the last few days failed to close up in the resistance zone at $134 and the close below $132.50 is a bearish signal because as you can see in the chart below the week leading into Memorial Day weekend we couldn't close above 132.50 except for once and that led to a pretty steep decline.

2.  The 20 day EMA in the short term begins to inhibit price action higher that is where we failed on May 29th.  When multiple resistance's converge in one area most likely that leads to a selloff in price.

3. Because we have moved $5 in 3 days it is not unexpected that those who bought calls on this rally are selling those and for traders that see this kind of price action they are going to begin selling the rally which is what it looks like they began to do at the end of the day.

If this is a market bottom this move will most likely be swift so if you plan to be short and buying puts its probably not a bad idea to keep things on a relatively short time frame.  We'll see tomorrow

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Disclaimer: This article is intended to be informative and does not constitute a buy, hold, or sell recommendation., and should not be construed as personalized advice as it does not take into account your specific situation or objectives