As we wrote last night$SPY had significant support at 115.2 and 113.2. Today’s bounce came at 115.28. Nice to be right (daytrade 115.2 to EMA at 117 was the typical HCPG strategy day-trade which is now finished), but on days like this we don’t expect perfect, text-book bounces, we expect messy overshoots.
Bounce on 115.2, rally to EMA, and base. This is the kind of chart we expect on a normal support trade on a typical day. Not after the day the US loses triple AAA status. If indeed we bounce from these levels we think it would just be a pause for further selling in the coming days. This is orderly selling, no fear. No overshoot, no mess, no blood. This is what we meant earlier when we wrote that we were “non-believers” on this 115.2 bounce. It’s too clinically perfect. We go through today’s lows though be it today or later this week and things will get hairier. And if we’re wrong, well then we just missed a bottom by being in cash. Worse things have happened.