Those who checked the links to the recently posted 60 minute live chart of the SPY & QQQ might have noticed some resistance levels that I added earlier today. With this being an OpEx day (options expiration), I typically don’t place much consideration into what the market does as OpEx days are often driven more by position squaring due to all of the expiring options than by the true underlying forces of supply & demand. Regardless, I figured that I would go ahead & point out those resistance levels out as prices are current challenging them at this time. We’ve also seen prices on the SPY regain the wedge today, something that definitely warrants monitoring into next week as if we don’t see prices move back below the wedge by early next week, along with a break of the support level that the Q’s bounced off of yesterday, then the odds that the markets will take out the recent highs will rise sharply.

All of the recently triggered short trades (BXS, CSGP, KRE, PACW, & PNC) still look more than fine from a technical perspective. The SPY did trigger a sell signal on the break below the 60 minute wedge yesterday but the Q’s found support right on it’s trendline & with both of those major US indices trading just above support, it might be best to wait to see if those support levels give way next week before adding any additional short exposure. One thing to note is that even if both the SPY & QQQ do go on to print marginal new highs next week, the bearish divergences currently in place on the 60 minute charts will almost certainly persist, with the chances of a sudden move lower remaining  quite elevated until/unless those divergences are negated via higher highs in the price & momentum oscillators. As such, my near-term bias remains cautiously bearish despite today’s rally & the SPY moving back into the wedge pattern.

On another note, I’m still holding off adding back more exposure to the mining sector despite the strong rally in the miners yesterday. I typically don’t try to read much into one day’s price action in a stock or sector unless that big price move coincides with some important technical event, such as a breakout above or below a key support/resistance level or a well-defined technical pattern. Despite yesterday’s powerful rally, the miners are still off their recent highs and still freshly off extreme near-term overbought conditions & bearish divergences. As mentioned recently, the most bullish scenario for the miners would be a very shallow pullback following such conditions, with a new wave of buyers stepping in to overwhelm the sellers. If & when that happens, which could  come soon on a break above the recent highs, I may decide to start adding back the exposure to the sector that I recently reduced. Until then, I continue to favor some additional downside and/or consolidation in the miners in order to work off the recent overbought conditions, divergences, & spike in bullish sentiment. Once again, that is speaking purely as an active swing trader. As an investor, in my longer-term accounts, I continue to hold several long-term positions in the mining sector & prefer to hold through any initial pullbacks that I expect to be relatively minor in scope & duration.