SPY trend analysis on the 375 min for AMEX:SPY by whcoach

As a larger trend trader, markets like this can be brutal. The one candle relief rally on Wednesday with the subsequent hatchet job of Thursday can destroy trades. Here is my bigger picture assessment of where we are and what we can expect. Remember – there are many ways to profit in this market and what works for me may not work for you.
I use a number of tools to understand the shape and direction of the market. In volatile times like these I prefer to use the my custom Squeeze indicator on 4 settings to understand the underlying momentum of the market. I combine this with my custom squeeze stochastic . By understanding the 4 oscillators you can see where change is coming and prepare accordingly.

Lets look at the 375 min chart. I am often asked why i trade this time frame. Its because I get a signal at the open at 9:30 and one signal 15 min before the close at 15:45 which allows me to position my trades accordingly (side note – I do use this on intraday charts as well).

We have been trading a long puts signal which was triggered back on 6 April and we have had numerous opportunities to add and take profits on this larger trend trade. We received a SHORT trigger on Thursday at 15:45 and we landed up not going anywhere on Friday, trading in the green support zone . We closed near the low of the day with a bearish tombstone candle.

The key element now is to look at the stochastic line in each of the 4 under chart oscillators. Notice how the line is orange and pointing down? This shows that the momentum is clearly to the downside so trend based positions should be to the downside. As we are trading at the bottom of a support zone we need to see the open and the first few candles of Monday to determine if we are heading to 400 or if we will head back to the 420 level. For the intraday folks, that can be easily managed or tracked on lower time frame charts. Where we close at 15:45 on Monday is crucial to this as a break to the downside of 410 will convert the green support zone into a red resistance zone making a move to 420 that much harder.

My personal bet is we will trend downwards towards 400 over the coming days as the 10 and 15 squeeze is breaking to the downside. A break of 400 will open up the potential for a move to 380 and a bullish move above 426 will open up a move to 440.

In this market anything can happen so position sizing, risk management and emotional control remain your keys to success.

Remember – no one really knows for sure what will happen. Take my views with a pinch of salt. If my analysis resonates with you and helps make you a better trader, awesome! If it does not, move on.