At 10:45 AM ET on Friday July 26, 2 hours & 15 minutes after the release of important PCE (Personal Consumption Expenditure) inflation data, this is what Mike Paulenoff discussed with MPTrader members about SPY (SPDR S&P500 ETF):
"If I have a concern today it is the unfilled up-gap left behind from last eve's 4 PM ET close at 538.32 to the low of the AM session so far at 541.25. It WILL be filled, the only question is sooner or later? Usually, a "sooner than later" scenario represents a healthier, more constructive bullish initiation setup, provided renewed buying interest emerges in the lower portion of the gap, which in this case is 538.30 to 539.50... Forewarned is forearmed! Last is 542.58..."
The following Tuesday, July 30 -- day one of a two-day FOMC meeting -- Mike followed up with his pattern analysis and his visual chart work, noting:
"... in today's mini-implosion, we see the weakness has nearly filled the entire up-gap left behind last Friday. Today's plunge after a third failed rally into nearest resistance at 547.20/50 has pressed to an intraday low of 538.52, just $0.20 from filling the entire gap. Buyers need to emerge in and around the 538.30/35 area (or higher) once the gap is filled, otherwise, SPY will be vulnerable to pressing to a test of last Thurs. important low-zone at 537.45/50-- and if violated, vulnerable to downside continuation to 530.00... Last is 539.14..."
Minutes later, SPY started to lift from an intraday low of 537.97 -- a complete filing of the up-gap left behind on the open of 7/26, but from above the critical 7/25/24 corrective pivot low at 537.45 -- entering a powerful upmove in anticipation of a dovish, "friendly" Fed to the prospect of a September rate cut (if not sooner). The above hourly SPY chart posted at 1 PM ET on Tuesday July 30 for our MPTrader members shows Mike's preferred price path scenario (dotted green line) if SPY attracted buying interest after filling the July 26 down-gap.
The rest is history, as they say. Hours later, just before the FOMC Policy Statement was released on Wednesday July 31, SPY had rocketed to a high at 551.77 when Mike again posted his updated work for our members:
"... T-minus 35 minutes until the FOMC releases its new policy statement, which The Street expects the Fed to "unambiguously" telegraph its intention to cut rates in September (the Fed funds market is 100% certain of that heading into today's announcement)... In any case, my preferred scenario argues for a pop in SPY to higher-rally-highs above 551.77 (earlier today) to 552.80-554.00, where my pattern work indicates SPY will be vulnerable to near-term upside exhaustion off of last Thurs. low at 537.45, followed by a downside reversal that initiates a bout of weakness toward another test of last week's low... Last is 550.34..."
Fast-forward to last Thursday, August 1, when Mike posted another follow-up chart-based commentary concerning the highest probability directional price path for SPY from a recovery high at 554.87, marginally above his anticipated Target Window of 552.80 to 554.00, writing:
"My suspicion is that today's plunge in SPY will hold support somewhere in the vicinity of the 540-542 range and attempt a short-covering bounce ahead of AAPL earnings after the close AND tomorrow AM's Jobs Report. However, if either or BOTH of these market-moving catalysts turn out to be weaker than expected, SPY will be vulnerable to a resumption of weakness that fully retests last week's low-zone at 537.50-538.00... Key intraday resistance hovers from 546.00 to 547.20... Last is 543.67... "
Although Thursday evening's AAPL earnings report turned out to be a non-event directionally for the indices (AMZN's earnings report was a decidedly negative "event," however), Friday morning's much weaker-than-expected July Jobs Report pummeled the equity indices in general, nosediving SPY from the prior day's recovery high at 554.87 down through the critical corrective lows at 537.45-537.50 into new multi-week corrective low territory at 528.60 -- a full 6.5% below the All-Time High of 565.39.
What should we expect next for SPY? Is it nearing or at a significant oversold, exhausted inflection level? If not, then where are Mike's next optimal downside Target Windows?
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