So far this year the SPY is up roughly 22% at the time of writing after making some pretty big downside moves in late 2018. While this recent pullback from the trade tariff spat has added a layer of volatility into the game, the fact is the US economy is still going strong, and until we start seeing some worrying data coming out from the US, the trend, in my opinion, is still bullish.
From a technical point of view, we can see an inverted head and shoulders pattern on the daily chart. Shortly after making new highs, we’ve likely come down to test the neckline as well and previous resistance now support and also the 200-day simple moving average.
There is still a good chance that we come and test the 200 daily at around the 277 level even after the last 2 days of bullishness. We can also expect to see the 100 moving average cross above the 200 daily moving average will certainly add more fuel to the bullish thesis on the SPY.
So if you are a buy the dipper kind of trader, look around for some of your favorite stocks that you’d like to hold onto long term and start loading up.
To protect your long positions, you could either buy some puts or look to get out of the trades if we see a confirmed break below both the 100 and 200-day moving average on the SPY. A break below these supports could signal further downside to the overall market.