SPY crosses 50 day moving average and its time for a rally

SPY is clinging above the 50 day simple moving average line support on a daily chart. We’ve seen quite a bit of green, fairly fast over the last three days in what has been a volatile month of August.

A light volume ahead of a three day weekend today, especially as the trading session progresses through later in the day. However, it will be critical to respect the 50 day simple moving average line support which is a support level we haven’t seen in a few weeks as we’ve been trading under it, meaning it has been resistance.

The support number to hold today is 294 at which Wall Street will be looking for an Inverse Head and Shoulders to form followed by buying to open and selling to close call options. Below 294 and calls will be off the table as support will have broken.

Now should 294 hold and that inverse head and shoulders set up for a call option play within the first hour of the session. It’s time to be picky today due to the lighter volume so that entry better be perfect. As usual, if one is comfortable with the Inverse Head and Shoulders chart pattern then its time to pull the trigger on SPY September 4 295 Calls.

Resistance: 294.50, 296.64, 295

Support: 294.16, 294, 293.50

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