This morning’s pullback to the uptrend lines on SPY & /ES following the hotter-than-expected PCE report offers another objective long entry for a bounce trade with stops somewhat below as well as a short entry or add-on to swing positions on a solid break below the trendline. 60-minute charts below.
SPY 60m Feb 24th
ES 60m Feb 24th
Bottom line: The major stock indices continue to test key support from above. In light of the recent sell signals & other bearish developments on the daily time frames as well as the recent breakout of the $VIX above its bullish falling wedge pattern, it appears that these key support levels are likely to get taken out sooner than later & sooner could be as early as today. As such, active traders might opt to continue to game the bounces off support as long as that continues to work and/or short breaks of support and rallies into resistance while typical swing & trend traders might wait for a solid break below the support levels that QQQ & SPY have been testing this week to add to or initiate new short positions. The institutions will likely either buy up this pre-market dip at the open, the scenario that I am leaning towards, or pile onto the selloff to extend the losses so stay flexible & nimble if actively trading.