The Bounce

SPY Daily

Bespoke mentioned a few days ago that the decline has been the worst since 1931. It would be nice if we can still that say that once it is over.

The recent bounce touched the 18 day simple moving average and retraced back to the 38.2 fib line. This is a pretty good place for it to turn back down. Best case is that a rally could continue to the 61.8 line at around 290. Prices cutting strongly above the 18 day is probably a prerequisite for that to happen.

SPY Monthly

The 13 and 39 month averages will probably flip. This month is the first time that that 39 month average has been clearly broken on the downside since 2008-9. It is possible that this could turn into a 15 month double bottom with a head fake, but a V recovery from the collapse this month is optimistic.

The retracement low was below the 61.8 Fib number as measured from the 2015-6 lows. That pattern could be penetrated in this bear market. The recent bounce has stayed well below the 39 month average.

One of the reasons I had been bullish is that it was clear that unfriendly market behavior would not be tolerated politically, so that seemed to put a floor on risk. Didn’t see the biblical events coming, but things were never really all that solid anyway.

Political rhetoric, has taken a bizarre turn. We should be prepared to sacrifice our lives for capitalism (or plutocracy) but it’s OK to be too cowardly to hold SPY over the weekend.

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