A big gap down on the SPY this morning that had a number of reasons to look to buy the open.
(a) The gap from the previous day's close to the open was just about 1%, quite a large deviation that should tell you to pay attention to the lows and how they're being tested.
(b) Price gaped down right on top of the 50-EMA on the daily chart
(c) the gap also coincided with a number everyone was looking at for support, $102
(c) the momentum divergence on the 30-min chart that I mentioned yesterday.
Take a look:
Other than that, price just chopped around my support pivot all day long.A curious observation about today is that the TICK had a lot of large positive readings, not sure what that's saying about the market breadth.
After all is said and done we closed the day up, on top of the 50EMA as a gap-down (but filled) inverted hammer. While the weekly chart doesn't look overly bearish, yet. The 20-ema has just caught up with the 50-ema and price sits right on top of a 38% retracement from the highs of '07 to the lows of March.
The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at firstname.lastname@example.org
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