We closed Friday under the Bollinger Band, the first time since March 16. As you can see from the last time it occurred it offered a nice opportunity long for traders.
Let’s zoom out and look for other instances SPY has closed below the Bollinger Band. Time and time again this simple tool has given great general reference points for bounces.
Ideally we sell off into next support, which is at 129.5 zone, and then enjoy a dead cat bounce. As you know we believe this is a range-bound market meaning we also do not expect a straight trend down. However, the emphasis lately seems to have shifted from “buy the dip” to “sell the rip”.
Our range now is between 131.4 resistance (which was the old support gap fill) and 129.5 support.
Please view everything we write in the context of our time-frame as short-term traders.