The market has been staying as elusive as it can be. Just look at the SPY daily chart below. Head fakes everywhere for both the bulls and bears.
2 sessions ago, it looks like it was headed to the top of the bear channel or at least the 50 MA (yellow). Instead, it gapped down and sold off till the bottom of the bear channel. Long there or short?!
Today, it gapped down below the lower trend line, shaking out the bulls and suckered in the new bears. It was supposed to at most back-test the broken channel and then head toward the August low or the lower Bollinger Band (dotted green line). Instead, it went above the trend line and closed at high of day with force.
Enough said. It’s impossible to trade.
Based on the close, green gap tomorrow appears to be in the cards. Now the bears were trapped, perhaps the market is ready for the 50 MA test this time.