In my post on Tesla, I mentioned retail investors had poured almost $10bn into the stock since the beginning of this year, making it the top destination for inflows and outstripping the SPY, which came in second with inflows of $3.6 billion. The next three spots are taken by Amazon, Apple, and Nvidia, and I will be covering these in subsequent posts. However, it is SPY I want to focus on in this post, not least given today’s price action, which has seen SPY fail to hold onto last Friday’s holiday weekend’s gains and break lower.
Once again, I want to consider the weekly chart where this year’s bullish move in the ETF came off strong support at $380, with the rally supported by good volume until the price action hit the resistance in the $415 region. And although the last up candle in the trend was accompanied by the highest volume, the upper wick was also a signal of a potential pullback which is confirmed by the two subsequent candles. The question now is whether the current break lower is a fake-out, and we won’t know until today’s close, or whether it continues, and if so, where the price action is likely to pause.
For this, we need to consider the daily chart where $395 is the most obvious level and is where we also find the volume point of control.
The daily charts for both the SPX and ES are similar in structure, which is what we would expect, and I have included them here for completeness.
Today’s move lower in the SPX has also seen the VIX spike higher to trade at 23 at the time of writing, although it has not, as yet, taken out last month’s high of 23.76.
From a fundamental perspective, today’s market swoon is ahead of tomorrow’s FOMC minutes, when both traders and investors hope for some clarity as to whether the upward pressure on rates is over or not. Last week’s comments from Bullard and Mester would suggest otherwise.
One final point about the SPY in terms of its YTD performance investors would have had a much better return from the QQQ. In January alone, the return on SPY was 6.18% against 14% in QQQ, confirming a return to the tech sector after last year’s dismal performance.
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By Anna Coulling
NB – This post is for educational purposes only and does not constitute financial advice and must not be taken as a recommendation to buy or sell any of the instruments mentioned.
All the indicators featured on the charts are my own and available from Quantumtrading
Do you offer mentorships?
At the moment we simply do not have the time. Not least because the upcoming Stock Trading & Investing Program has taken over 15 months to complete. However, it may something we will consider later this year. Meantime, if you have not done so already you may wish to sign up for details about the Program which we hope to launch in the coming weeks.
Quick question, I use the On Balance Volume alongside regular volume bars. I tend to like both given that OBV gives me a broader view of volume flow while regular bars give me a very granular view. What is your take on OBV? Is it logical to use it alongside regular volume bars?
Anyway I am enjoying the trading course and think you and David did an absolute stellar job!
First, thank you so much for your kind words about the course and delighted you are enjoying it. We don’t tend to use OBV but there is no reason why you cannot use it with volume price analysis. Hope this helps.
Hi！Anna! I’m a big fan of yours.I feel a lot after reading your book.I’d like to confirm my reading experience,CTAS confirmed whether the sell-off was at its peak from 2021 to 2022 based on volume and price analysis.
Is this the Cintas corporation you are referring to?