The stock market will retrace, watch these supports

15 мая 2022 г.

It’s been a while since I wrote my last Traditional Markets Saturdays, mentioning how the SPY would see a retrace from that $460 level, succeeded by a run which didn’t happen. So, now the index is trading below $400 for the first time since early April of last year. It’s also down 20% from the all-time high.

Taking a look at the volume profile ranges since the ATH, there is a clear downtrend strengthening: after the first impulse we got a bounce on the VAH (Value Area High), continued by a bounce at the VAL (Value Area Low). We were still in a consolidation phase, until we rallied above the VAH and set a fakeout, or false breakout.

Then we broke out from the value area, which confirmed that the rally to $460 wasn’t the end of the dip. I expect now a retest of the anchored VWAP since the COVID black swan (in order to keep momentum up). Then, we may see a support/resistance flip at the VAL. Lastly, if fundamentals change (which isn’t likely), the SPY could touch the 0.618 fib level.

A bit more off-topic though, is that I changed (again) my colours to a light mode theme. Anyway, I hope you enjoyed the write-up!