It's all fun and games until someone loses a SPY
SPY is probably the most watched ticker on the planet for good reason. The world's most powerful companies are used as a benchmark of entire economies. The SP500 is somewhat of a weathervane for everything finance.
Many are wondering where is the SPY going. All time highs or into a prolonged downtrend. We are used to SPY making new highs every day and we've been deprived of our bullish addiction for what seems like forever. A simple pitchfork helps answer that question, to an extent. It's important not to predict price action but rather have a series of plans that are favorable to one's bias as well as plans that run counter to that bias.
The pitchfork shown validates well. You can see price making direct impacts with the inner workings of the fork and they have served as both support and resistance several times.
What is interesting is that there is an overshoot on both sides of the pitchfork, suggesting a glitch in the frequency of this market's harmonics. They stand out as much as an out-of-rhythm drum would in a song.
Good news is that we aren't composing music here and we can tune our chart to the frequency of SPY.
You can see how I shifted the pitchfork up to capture the topside movement. If we were to look at the pitchfork now we can also see that it still validates very, very well. Welcome to Newton's laws of physics applied to technical analysis. We'll do this one more time to account for the bottom anomaly mentioned earlier.
This pitchfork validates well also, so we can apply three different perspectives utilizing the same market geometry from three different anchor points.
1) In the original screen shot we can see that price has broken the centerline of the pitchfork, bounced off of the top, and has returned to the mean where it bounced off of the centerline as support.
According to Andrew's interpretation of the pitchfork price should move back to the outside boundary without much effort. Instead we see price struggling to separate from the centerline. This leads me to believe that price is destined to test it once again and potentially break through it.
2) In the second picture we see price currently rejecting off of the centerline which appears to be behaving like a retest of resistance. I interpret this as prices should be expected to want to move to the outside boundary, which in this case would be the bottom of the array.
3) In the final screenshot price is currently rejecting off of the inner-upper line of the pitchfork. It should pass through this if it intended to move to the outer boundary. Instead, it is retreating from it. I understand this to mean that price is likely to move down and test the centerline of this array at a minimum.
Three different pitchfork studies using one pitchfork all tell the same story. Prices should be moving down from here. This is great confluence.
The RSI indicator is telling a story as well. Prices have shown to negatively react to an RSI of 52-56 and have subsequently turned down several times recently in this area.
Additionally, volume is telling a story that should not be ignored. If this were to be viewed as a "buy the dip" opportunity, where are the dip buyers? Volume remains below average even when potential longs are tempted with lower prices.
Lastly the structure of price action itself is a clue as to where prices may be heading. Lower highs and lower lows are symptoms of a down trend and this, in my opinion, dashes hopes of a return to daily all time highs.
It is in my opinion that the SPY is at the very least ranging into a potential mark down scenario according to Wyckoff's logic and validated by Andrew's application of physics via the pitchfork array, momentum studies, and volume analysis. Worst case scenario, SPY is already in a mark down phase and devaluation has only just begun. I do not personally see a mid term bullish scenario.
Thank you for your time.
Many are wondering where is the SPY going. All time highs or into a prolonged downtrend. We are used to SPY making new highs every day and we've been deprived of our bullish addiction for what seems like forever. A simple pitchfork helps answer that question, to an extent. It's important not to predict price action but rather have a series of plans that are favorable to one's bias as well as plans that run counter to that bias.
The pitchfork shown validates well. You can see price making direct impacts with the inner workings of the fork and they have served as both support and resistance several times.
What is interesting is that there is an overshoot on both sides of the pitchfork, suggesting a glitch in the frequency of this market's harmonics. They stand out as much as an out-of-rhythm drum would in a song.
Good news is that we aren't composing music here and we can tune our chart to the frequency of SPY.
You can see how I shifted the pitchfork up to capture the topside movement. If we were to look at the pitchfork now we can also see that it still validates very, very well. Welcome to Newton's laws of physics applied to technical analysis. We'll do this one more time to account for the bottom anomaly mentioned earlier.
This pitchfork validates well also, so we can apply three different perspectives utilizing the same market geometry from three different anchor points.
1) In the original screen shot we can see that price has broken the centerline of the pitchfork, bounced off of the top, and has returned to the mean where it bounced off of the centerline as support.
According to Andrew's interpretation of the pitchfork price should move back to the outside boundary without much effort. Instead we see price struggling to separate from the centerline. This leads me to believe that price is destined to test it once again and potentially break through it.
2) In the second picture we see price currently rejecting off of the centerline which appears to be behaving like a retest of resistance. I interpret this as prices should be expected to want to move to the outside boundary, which in this case would be the bottom of the array.
3) In the final screenshot price is currently rejecting off of the inner-upper line of the pitchfork. It should pass through this if it intended to move to the outer boundary. Instead, it is retreating from it. I understand this to mean that price is likely to move down and test the centerline of this array at a minimum.
Three different pitchfork studies using one pitchfork all tell the same story. Prices should be moving down from here. This is great confluence.
The RSI indicator is telling a story as well. Prices have shown to negatively react to an RSI of 52-56 and have subsequently turned down several times recently in this area.
Additionally, volume is telling a story that should not be ignored. If this were to be viewed as a "buy the dip" opportunity, where are the dip buyers? Volume remains below average even when potential longs are tempted with lower prices.
Lastly the structure of price action itself is a clue as to where prices may be heading. Lower highs and lower lows are symptoms of a down trend and this, in my opinion, dashes hopes of a return to daily all time highs.
It is in my opinion that the SPY is at the very least ranging into a potential mark down scenario according to Wyckoff's logic and validated by Andrew's application of physics via the pitchfork array, momentum studies, and volume analysis. Worst case scenario, SPY is already in a mark down phase and devaluation has only just begun. I do not personally see a mid term bullish scenario.
Thank you for your time.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.