Market Outlook – 23rd Aug, 2022 (gap fill down or gap fill up)?
Market Outlook – Gap fill down or Gap fill up?
The market, which had been firmly in overbought territory early last week, has finally started to pull back somewhat after failed to cross 200 SMA. The VIX had a slight move higher with the SPX moving lower. Friday was a rough session which was followed up today with a very rough Monday to start this week.
$SPY gapped up this morning and moved lower today on increasing volume. This started to fill its gap lower around 408 area.
The 20 & 200 emas didn’t made any difference today for SPY. Because of the weaker look & no bounce, its possible to see this pullback towards the $408 area in next few days if there is no bounce above those EMAS. Also, on 30 mins chart.. a bearish flag is happening which can possibly takes $SPY towards 410-408 in near term if no bounce above $415-$416.
Note – I like to see EMAs ( Exponential Moving Avg) vs. SMA ( Simple Moving Avg). Exponential moving averages (EMAs) are designed to see price trends over specific time frames, such as 50 or 200 days. Compared to simple moving averages, EMAs give greater weight to recent (more relevant) data. Computing the EMA involves applying a multiplier to the simple moving average (SMA).
$QQQ also gapped down today under the 20ema & moved lower into the $314 support. After market it tried to rebound. If this level doesn’t hold tomorrow, QQQ can move lower towards the 311 which is 50 ema next. There is also a lot of support at 310-311 area. Fed speakers are set to speak at Jackson Hole event this week. Just FYI.. Fed Chairman Mr. Powell is going to speak on Friday at 9 AM CST. It will be interesting to see if we fill gap down (408) on spy or gap up ? My vote – fill up gap down first before go up!