• SPY finally sheds some gains and closes down nearly 1%.
  • SPY was hit by weak retails sales numbers and Delta fears.
  • S&P 500 ETF has now dipped, so is it time to buy?

Do not get too excited, but we may have spotted a dip on the horizon for you to dip into! Dips, any dips, have been eagerly bought up since the pandemic started as equity markets have gone on the greatest bull run in decades. CNBC reported yesterday that the S&P 500 has doubled from the pandemic low, the quickest doubling since World War II. This may be worrying with our friends over at the Market Ear pointing out that 100% returns tend to result in corrections. Some are modest ones, but some others are rather nasty ones. 

100% sure we get a correction after 100% gains?

Source: Refinitiv and themarketear.com

Nobody it seems is overly bullish, but with a backdrop of the Fed and every other central bank pumping and households and corporates awash with cash, we cannot see the party stopping just yet. Earnings season was stellar, and buy-back season is starting. Dips then are there to be bought in our view. The problem is making sure it is just a dip and getting in at the right time.

SPY stock forecast

We identified $441.31 yesterday as the first support, and so it was that $440.85 was the low, close but not perfect. Will this support hold? Who knows, but savvy buyers may have stepped in to buy, seeing the volume profile just below and knowing that there should be volume-based support underneath to limit losses and make any slippage on a trailing stop minimal. There is prety decent volume support until $436. If $436 breaks, then it is a waitng game. The trend line will come into play at $430, but we are not too happy with this support level and prefer $423. 

For now the market remains bullish with the classic series of higher highs and lows, but the 9-day moving average has given way. The 21-day has held though and adds to our $441 support level as its sits there. The momentum osciallators are not giving us too much, but the Moving Average Convergence Divergence (MACD) indicators have broken out of the bearish divergence downtrend. 

 


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