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As you can see on the 5-minute SPY chart below, the market is leaning back down against the key $138 level. If you have followed my work, then you know the market has assigned a good deal of meaning to that $138 area over the past two months. The choppy nature of the recent tape offers us a tough setup, in the sense that the bulls were able to get back above that level this week, but are flirting with losing it again. Note the descending triangle forming today as well, with lower highs after a spurt of strength this morning. That pattern has me thinking that resolution is coming soon, one way or the other. Options expiration tomorrow could be an explosive move.
This continues to be a “when it doubt, wait it out” market for me. As we saw earlier this month, I suspect that if the bulls lose $138 again, we should see a group of sellers emerge.
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