One need not look for a Reversal Day price bar any longer. We had one yesterday. Although an uptrending bar, price made a new high but closed below the prior day’s close and the current day’s open. The upward price pulse from the low of 1438.53 (which is now classified as a price fractal low) completed at yesterday’s high. Volume continued to shrink which continues to be bearish at this point.
Although we poked above it, the 1490 level proved to be good resistance yesterday. Previously that level had been support and so; particularly after yesterday's reversal bar, a retest of the most recent low appears to be in the cards.
Since I believe the retest will be successful and that the low is in, I will be going long the SPY on any move above yesterday’s high. Actually I don’t expect to be filled today, but I am willing to position my long based on the belief that we are due a short-term low by this coming Monday. My entry point will follow the price bars down as long as we don’t get a new low. My initial stop will be right beneath Monday’s low. For my blog related trading account at Investopedia (the No End competition) under the name of SaxbyFox, I will be putting in a buy stop for SPY shares at a price of 149.41. My initial stop (when filled) will be just under Monday’s low of 143.69 so that I am risking 5.72 points.
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