Here are some facts on the 5-year chart for SPY:
- bearish divergence - as SPY reached new highs from 2018 to 2020, the RSI has been declining (green trendline on the RSI indicator);
- The decline in February 2020 hasn't reached oversold levels yet. We were close to that level in December 2018, but not quite there;
- The resistance line (in green) from the highs in January 2018 to September 2018 is now in play. We crossed it down in February 2020 and are now trying to reach it again in March. If unsuccessful, we will test again the support line of the long term channel.
Given that the VIX is still above 30 (chart below), and that the FED rate cut didn't help calm things down, I don't expect SPY to go back to ATH soon.
We will need to retest the lows before we have another chance.
- bearish divergence - as SPY reached new highs from 2018 to 2020, the RSI has been declining (green trendline on the RSI indicator);
- The decline in February 2020 hasn't reached oversold levels yet. We were close to that level in December 2018, but not quite there;
- The resistance line (in green) from the highs in January 2018 to September 2018 is now in play. We crossed it down in February 2020 and are now trying to reach it again in March. If unsuccessful, we will test again the support line of the long term channel.
Given that the VIX is still above 30 (chart below), and that the FED rate cut didn't help calm things down, I don't expect SPY to go back to ATH soon.
We will need to retest the lows before we have another chance.