Note how the SPY failed to backfill the July 11th gap on the recent attempt, as forecasted in the previous chart… a sign that the supply/demand dynamics have shifted and sellers now outnumber buyers. It is also worth mentioning that the SPY made a new lower low today, thereby reaffirming that the near-term trend is remains down for now and also supporting the case that an Island Cluster Reversal pattern has been put in place.
A reaction off the 163.30ish level remains likely if/when we get there but my primary intermediate-term target before any substantial reaction (bounce or consolidation) is still the 160.30 area, as defined by the bottom horizontal line. A move above Tuesday’s reaction high might call the near-term downtrend into question but not completely unwind it and only a move over the Aug 13th highs would undo the current downtrend (as defined by a series of lower lows and lower highs). If prices were to manage to take out Tuesday’s highs, the SPY would have to contend with very formidable resistance at the bottom of that large gap from last Thursday (167.43). Previous 60 minute chart from last Thursday followed by the updated 60 minute chart.