As we wrapped up the week last week we talked about how the S&P 500 ETF (Symbol: SPY) had held the 89 EMA on the daily chart 5 days in a row. Holding a big support level like this can lead to some powerful bounces higher. That is exactly what we have seen to start the week.
Markets continue to brush off all bad economic news and have continued to rally higher midweek on hopes of more stimulus. The early rally that we saw after the open this morning came after headlines hit that another round of stimulus was close. Fast forward a few hours to this afternoon and we saw another round of headlines talking about how stimulus talks weren’t close and markets immediately sold off. This is why trading markets that are so news driven can be challenging.
Trading has been so much fun the last few weeks because markets were focused on technical levels instead of news. We are now back into a news cycle this week which can lead to more volatility. This is due to headlines coming out at any time of the day without notice. We also have the jobs report out Friday before the market opens which can also lead to big movement heading into the weekend.
We tested both the 50 MA as well as the 20 MA on SPY today around the 335.50 level. Those resistance levels held and price back below these levels. That 335. 50 level is key for us to break on the upside on a closing basis on Thursday. Should that level break we could see another nice pop to the upside going into the end of the week.
In our Midweek Update video below we cover our outlook for the rest of the week in more detail. We take a look at where we stand on markets like SPY, QQQ, AAPL, C, JPM, XLE, and ETSY. We also take a look at one of our Overnight Pop trades that we closed out for a winner here today on SPY. These overnight trades have been doing great for us and we are really excited to use these more and more with our traders going forward.
Take a look at the video below and let us know if you have any questions that we can help with. We will be back on Friday as we wrap of the week with our Weekly Recap.