We had a nice pop in the market on Friday with signs that the lower timeframes are overbought.
We’ll review our open SPX 4100/4125 call credit spread for October expiration and our game plan moving forward in the Compounding Growth Mastery.
The S&P 500 (SPX) has a 5-min Big 3 buy signal with the hourly 21 exponential moving average (EMA) above the 50 simple moving average (SMA), a bullish moving average crossover. From the ground up, the lower time frames have improved. Keep in mind, though, this is all taking place where the market could get rejected and roll over.
When the market is oversold, we see fast and furious short squeezes. Things have improved so quickly that these lower timeframes are slightly overbought. The SPX is approaching resistance as it is trading at 3+ average true range (ATR) above the hourly 21 EMA.
Next week, we’ll see if this was just a rally to the daily 21 EMA or if there’s more upside momentum left in the tank.
Let’s see if the lower timeframes flush and hold support, letting the bulls take the market higher. If instead we see a flush and the lower timeframes further break down, see if the bears bring the market back toward the lows.
In the video above, we’ll also review the QQQ (Nasdaq) as there are two daily Big 3 sell signals printing with a negative moving average crossover.
Keep an eye on your inbox for the Sunday newsletter where we’ll put together a scorecard of the big picture for next week along with review our newest trade on ENPH.
Stay Focused!
