$SPY Downtrend Intact Despite Potential +2% Relief Rally

jfsrevg
03-15 07:56

$SPDR S&P 500 ETF Trust(SPY)$ — The Current Reality

Price is sitting at downtrend channel support, which could allow for a short-term bounce. Moves within this channel can easily reach +2% in upcoming week, making it tempting to turn optimistic if it happens over the course of 3-4 consecutive sessions (eg. Mon +0.4%, Tue +0.7%, Wed +0.5%, Thur +0.3%).

The reality is market structure has already evolved into a an established downtrend with lower highs and lower lows.

There could be selective long ideas/trades to be taken but, the downtrend channel supported by deterioration in breadth isn’t an environment where holding with a conventional short term moving average stop is ideal. It is much more advisable to be more proactive with your partial profit taking when they work in your favour.

This is the ideal market to practice 'always look for reasons not to take a trade, not reasons to force one.' We need to preserve our mental capital to capture the low-hanging fruit when bear exhaustion sets in.

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