Quest For All-Time Highs

When last we met, the market, as represented by SPY, had completed a large “W” pattern and took off like a shot, breaking above the 200-day moving average. If you’ve followed The Lund Loop for any amount of time, this was expected.

I then drew one of my now famous boxes and suggested that some sideways action in that box would be what we wanted to see before attempting to move higher.

And that is pretty much what we got.

(click on any chart to embiggen)SPY

Technically we have some pros and cons.

We’re above the 200ma and have moved out of the box after taking a rest (pro).

But we have now stalled. And though the last three trading days don’t quite form a bearish Evening Star pattern, it looks look a potential reversal pattern (con).

Having said that, a reversal here would not be the worst thing in the world as we have come very far, very fast. If we do reverse, as long as we stay above the 200ma I would not worry.

But as you can see, we are potentially moving back into an uncertain market where the easy money has already been made.

One interesting note, the SPY formed an NR7 bar on Friday – meaning the narrowest range bar over the previous seven trading days. This type of bar usually indicates that buyers and sellers have reached equilibrium – both sides equally matched – for now.

When an NR7 bar presents itself, it doesn’t take much volume, either bullish or bearish, to create a big move. I suspect we will get our answer Monday or Tuesday as to whether we continue higher or come back into that consolidation range – and possibly test the 200ma.

Stay tuned…..

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Brian C. Lund

Brian C. Lund

Great father. Good friend. Decent trader/writer. Lacking husband. Solid drummer. Sometimes funny. Often A-hole. Terrible poker player. Too smart. Punk rock. Work in an ice cream shop.

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