As I mentioned in my last post, $114.20 is a key level to watch for this morning. I expect that SPY will gap up to open around $114, but regardless where it opens, SPY should approach $114.20 soon enough. If we move above it, I will look for an entry point to go long. There is quite a bit of resistance here, so it will require a strong showing of buyers to break through. This hasn't been a problem in the past, but today is even more significant because if the buyers do not step in, the S&P will risk closing below the up-trend for a second consecutive day. This would provide bearish sentiment we have not seen in a while.
With that in mind, I will be looking for an opportunity to Short at any signs of a failed break through $114.20.
Personally, I hope that we do not move above $114.20. I would like to see the bears maintain some control for a change... But I'm ready to take a position in either direction...
To the downside, we need to watch $113.20, a break below this price will bring up the next big support level of $112.20. So really, the two big numbers that will dictate this market are $112.20 and $114.20. A break in either direction will determine who is in charge, the bears or the bulls... Obviously a break below $113.20 will also be good for the bears, however, to really take charge of momentum, the bears need to confirm a move below $112.20...
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If you did buy some SPY somewhere after $114.20, you should have already closed half your position at Gap Fill ($114.91). Hold the other half to see if we break the previous high of $115.14. AT that point you can consider adding to your position as well... At the same time you should be ready to Short the market at any confirming signs of a reversal...
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