Slaughterhouse Won

Last Friday as the market was heading back to the top of the range we wrote about how it was do or die time — we would either break-out of the range or fat pigs were going to the slaughterhouse.   On Tuesday we really didn’t see an edge for swing longs and wrote Not Good Enough Risk Reward which indeed was true since the market proceeded to dump later that week.
Our tells of Euro ($6E_F) lagging, combined with lack of good set-ups,  and Ags ($POT $MOS $AGU $CF)  underperforming helped us and our subscribers stay away from swing longs BEFORE the down move.
For the last 4 months the golden rule has been — the more the bulls get excited, the more you go to cash.   We broke the mini triangle down but we’re still in the bigger channel which has support around 119-119.5 on the $SPY.   Note that the trend-line moves every day and target needs to be adjusted.

Our favorite “tell” sectors are completely broken.    However, SPY will probably offer a decent short-term trade on the bottom of this channel.   We like the idea of an overshoot of the 50SMA (120.8) to bring in some panic, and then a bounce around 119 zone on bottom blue line.

If the bottom line of channel breaks (currently around SPY 119-119.5) then it’s going to get a lot dicier to navigate.   However, we’ll worry about that if/when it happens.   Have a good week.