Wither The SPY?

SPX Monitoring purposes; Sold long SPX on 12/21/20 at 3694.90 = gain 1.3%; long 12/14/20 at 3647.49.

Monitoring purposes GOLD: Long GDX on 10/9/20 at 40.78. 

Long Term SPX monitor purposes; Long SPX on 10/26/20 at 3400.97.

Friday we sent out a short note that said. “Today the SPY was up 4 days in a row which predict market will be higher within 5 days 83% of the time.  Four days up also suggest market will be down Monday and Tuesday.  Today’s tick closed at +328 suggesting short term exhaustion.” SPY was just short of touching last Thursday’s gap.  Today the tick closed at +306 and the last two times the tick closed above +300 are marked on the chart above and both times market retraced.  We are looking for panic in the tick and trin to create a bullish setup and so far that has not happen.  We do expect the market will touch a new high probably before the week is out but don’t have a good setup so far.  There are worrisome signs in Margin debt and Gamma Exposure suggesting upside is limited, but so far momentum is still up.  Market could be entering into a trading range. We remain short term neutral and intermediate term bullish for now (SPY).

Above is the daily SPY going back to 2003.   When the daily RSI for SPY gets near 80 range; it never (usually) the last high.  When the daily RSI starts to top out around the 70 or lower range is when momentum is running out of steam and market is due for a pull back.  We have drawn a trend line connecting the high going back to 2017 and SPY is above that trend line.  Two things could happen here; 1. Market goes parabolic above the trend line and RSI rises above 80 showing strength; or 2, SPY falls below trend line producing a false breakout and market has a retracement.  GEX (gamma exposure) reached 22M yesterday (highest ever reading) and usually puts on the brakes for a market rally over the next 30 days or less.  Can see new high here but GEX this high suggest upside is limited in the coming weeks.  

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