May 12th 2023

Chop continues in $SPY - unfilled gaps on both sides remain

Last week I mentioned the significance of the gravestone doji in $SPY, which until now has held the line through FOMC and CPI. Although we are consolidating in a megaphone, that is a strong layer of resistance, for now.

SPY 0.00%↑ is now 30 days in this tight range.

Some charts do show a potential diamond on $SPY, which could indeed be a bearish pattern, however that is still too soon to tell. For now we must assume we are in this megaphone which can trade as high as 420 and as low as 402 before really going anywhere.

We can also take a look at QQQ 0.00%↑ which is forming a nice rising wedge, which can still take a few more weeks to fill out.

With the megacaps basically fueling the entire rally, it’s important to keep the focus on them to know when the tide will turn. For now, QQQ does have room to 331.49, and has been largely supported by huge rallies in AAPL 0.00%↑ , MSFT 0.00%↑ and GOOGL 0.00%↑

Notably we have had some breakouts in the last couple of days to watch:

NFLX 0.00%↑
Mentioned LIS with no exception on shorts at 331.52 and here now we are almost at 341. There was 340C flow on the break of 331.52.

GOOGL 0.00%↑
Huge rally this week on GOOGL however now the RSI on daily is dramatically overbought and it approaches a fib cluster here between 117.45 and 118.77. Watching for a retracement to 112 area for RSI reset and gap fill.

For tomorrow here’s what i’m watching on the intraday: