Daily and weekly sell signal bars have been generated.
The runaway move up from early January is over. This change in character is defined by the failure of Thursday’s Plus One/Minus Two BUY setup. This set up elicited a rally on every occasion this year.
See this SPY
chart below which brackets each of these prior setups.
That being said, yesterday’s decline held a 50% retrace of the last little leg up.
The SPY is trying to cling onto a trendline connecting the prior corrective lows from the first quarter. However, it looks like at the minimum that a full test of last year’s May high at 137 is in the offing.
This also ties to a first kiss of the 50 day moving average.
Typically, the first time down to a test of the 50 sees a rally attempt.
Be that as it may, while moving averages are well respected technical benchmarks often times they are ‘flushed out’ or undercut before a reversal ensues.
Such was the case with the 20 dma on the 3rd anniversary of the ’09 March low on March 6th recently.
I would not be surprised to see an undercut of the 50 dma play out toward 136 SPY coincident with an expansion in bearish sentiment on this selloff which would tie to the lower rail of a trend channel before any meaningful rally attempt