Everybody has their own take on markets. Us too. That said markets (NYSEARCA:SPY) (NASDAQ:QQQ) have a mind of their own as we all know. We want to know if the market agrees with us or not. We're going to give a key nearby price level that can help confirm if we're headed lower.
On August 31st, we gave the following chart which helped get in front of the September 9th drop from the highs.
Here's the chart we showed at the time.
Source: Seeking Alpha August 31st.
Here's the view 9 days later.
Source: Seeking Alpha September 11th
We were bearish but we wanted the market to agree. When we saw it breaking a key level, we found we took it to mean risk. The levels we choose typically have a lot of break-out and break-down history ("Key Action"). That's where people have traded. When the market picks a side, it can sometimes show you its early leaning using these points.
That's what we want to do for today's market.
Source: Interactive Brokers
You can see above that the SPY price of about 217.50 was a key level. That's where the market either broke out, held, or broke down. Breaking through that level can confirm a bearish stance.
If you are bullish and want to wait, this is the level we'd watch. If you are bearish, this is the level we'd consider entering in a bigger way.
Fundamentals Matching Technicals
When the market agrees with the fundamental thought process, we can have confidence in our trade. A break of our line would mean to us that fundamentals and technicals are pointing down together.
We all have our own fundamental take. We want to see the market confirm that fundamental take. We think it will, but still, we want to see it. If we break 217.50, we'd guess there is further to go.
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I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.