Don't Look Down

The global market rally/gap fiesta that played out over the past week or so, came to an abrupt end yesterday as we approached the close. SPY almost filled the massive overnight gap, and ended the day back below the long-term (multi-year) resistance line around 355, after achieving new all-time high's. Looking at the monthly SPY chart after yesterday's rejection, traders might be starting to get that, "don't look down" feeling. I think it goes without saying that trading with caution at these levels is prudent.

As I've mentioned in previous posts, technical analysis is becoming increasingly difficult in a market that moves wildly off of immaterial headlines, and pure assumptions. But, we will continue to use technical analysis (and fundamental analysis), among others, to assess the state of the market, and future price action. The top of the megaphone pattern is the final line in the sand for the bears. If they fail to keep us below this level, and we see a breakout above on the monthly, we would need to reassess our outlook, and bearish thesis. However, for the moment, the technicals are still holding up, and the bears have a strong case.

Stay tuned for live updates throughout the day, and best of luck out there! If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.

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Good view of yesterday's vicious rejection. We've almost filled the gap now around 351.51. LOD is 351.91...

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Vix is notably off the recent low, but it has a lot of work to do to get back above the 100 day MA at 27.30...

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We're about an hour into the morning session, and the majors appear to be rolling over. Vix is spiking, and is almost back to even on the day...

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As you can see, the 50 period MA on the 15 minute was lost on the close yesterday, around 355.37. That set us up perfectly for a revisit of the 100 period MA this morning, which has already played out, and is providing interim support. The break below the 50 period also set us up to fill the gap around 351.51, which we haven't seen as yet. We have additional support around 347.50, and then around 343.22, which is the 50 period MA on the hourly. Let's see what happens next...

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Here we go. Gap filled, and the 100 period MA on the 15 minute was broken. 21 period EMA on the hourly also lost, and we may lose traction here, and slip down to 347.50...

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Vix picking up the pace here as we race toward the 100 day MA at 27.30. We're now sitting at the HOD around 26.70...

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The Nasdaq is down 6% since the Pfizer news. Uh oh...

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For the first time since this insane rally started last week Monday, we now have moving average resistance overhead. The 21 period EMA on the hourly (352.91), is now acting as resistance. SPY seeing some support here at the gap fill...

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Back at the 100 period MA on the 15 minute now (352.36). Let's see if it holds up as resistance...

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Bulls successfully broke through to about 353.23, and now we're seeing some weakness again as we sit on top the 100 period MA. We technically just saw a rejection at the 21 period EMA on the hourly (352.97). Let's see if we get another test...

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Bulls win again. They just broke us back above the 21 period EMA on the hourly. Let's see if they make a run for the 50 period MA on the 15 minute at 355.90. Remember, this MA is sitting at long-term resistance, so the bulls intention here would be to get us back above that level, and hold the line into month end. If we remain below 355 on the monthly candle, the megaphone pattern remains intact, along with the bearish thesis...

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Rejection around the 355 level again. Losing steam at the top of the afternoon session. If the bulls lose the 21 period EMA on the hourly again, things could get ugly heading into power hour. I'm still eyeing 347.50 as the next potential support...

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We're back below 353 again, and looking weak...

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Vix recaptured the 50 period MA on the hourly this morning (25.80), and now we're back above again. This is the first time we're breaking this resistance since last week Monday when the short squeeze from hell began...

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Looks like we're trapped between a rock and a hard place. We could see a big move shortly if we breakout of this flag...

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5 minutes to the close, let's see if there are any bears still alive after last week...

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Bulls held the intraday trendline support, and managed to keep us above most supports, barring the 50 period MA on the 15 minute (356.71). We're trading below the long-term resistance still, around 355, but it was a constant fight today to keep us in a tight upward bound range. Vix got smacked into the close and ended the day with a 24 handle. On the daily, it's clear we broke back below the ascending channel formed from the March lows. That's 2 major hurdles the bulls face at current levels. After today's muted price action, I suspect tomorrow we'll see more decisiveness.

Until tomorrow, thanks for your time guys, and enjoy your night! Cheers, Michael.

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This is in reference to SPY not Vix. Sorry if that was confusing!

"On the daily, it's clear we broke back below the ascending channel formed from the March lows. That's 2 major hurdles the bulls face at current levels. After today's muted price action, I suspect tomorrow we'll see more decisiveness."