If SPY gets too far extended from any of these lines, like it did Thursday, like the rules of gravity it’s going to come back closer to these averages. SPY is in the strongest up trend as long as it is supported by and holds over the 5ma. This is true on the daily chart and the weekly chart. If you now look at the weekly chart for SPY, with the same 5ma and 10ma, you’ll see it smooths out the choppiness and presents a nice picture of the up trend. One thing you may notice if you are looking at it now, is how high the 5ma and 10ma have gotten from the 20ma. It’s starting to look kinda like Oct/Nov of last year. See that? The RSI hasn’t reached those levels, nor have other indicators, but what it’s telling me is don’t be surprised if we get some more dramatic consolidation downward.
Now, don’t start buying puts on SPY because it looks extended. Many stocks including the ETF SPY have ridden high for a long time before falling back to earth. It’s totally okay, trade what’s in front of you which right now is the beautiful strong up trend. Just be prepared for some pull back consolidation when it comes.
So support and resistance for SPY for Tuesday: 287.18, 288.84, 289.37, 290, 290.40, 290.80, 291.20, 291.74, 292, 293.20, 293.50, 294.28
Note of credit to @options_snipper on twitter for learning most of this!