I will talk a little bit more about the market context / background today so to get a big picture we are facing now.
1. Big picture: Since July 31, the market SPY is still in down-trend. It has gone through 3 waves of drops on 8/17, 10/3, 10/27 respectively. If we knew this down-trend in July 31, the best strategy is to short when it bound the higher. But who knows.
2. Is the market going to have the 4th wave drop in Nov, i.e. below the low of 10/27? It is possible, but nobody knows it either. Technically, SPY 395 to 400 base would be more solid than that on 10/27 (SPY around 410).
3. SPY 421 is technically so crucial for this rally attempt from 10/27 low, Yes, as it is the MA200. We would like to see it run above MA200 to assure a solid uptrend rally.
4. Looks like the big environment (FED rate will hold this month, bond rate hold, etc) support this rally from 10/27. It is likely the SPY will close above 421 today, which will be a big victory for bull side.
5. Looking forwarding, this SPY rally will encounter big resistance at 424, 436, and then the tough challenge of filling the gap (435-439).
6. Timing and risk management are some of the key elements to keep you to survive in the volatile market. Be flexible and Good luck.
