SPY finally broke out of its short-term trend which was the bottom of the bear flag mentioned a week ago. Based on this break, SPY still looks like it wants to head back towards the 140.92 level. The more important support level that needs to break before we can head to that level is 143.46. SPY has climbed 15% from its June low a pullback isn’t the end of the world. While there has been technical damage done to the market there were some warning signs that this pullback could the stop at 143.36. First was that bonds were down today. This is worrisome since if this is to be a bigger decline there needs to be a move into bonds and money leaving the market. Gold and other metals also were not red today. These assets would traditionally be up if we were seeing “fear” selling. That being send the trend is down at this point and should test the lows from the last decline.
Potential targets for this pullback if 143.46 breaks are:
140.29 Cluster of support from the August and the price target of the bear flag. This would also fill the unfilled gap from 9/6.
139.96: Unfilled gap from the 8/2 breakout.