The SPY is losing the 21 ema now after the harsh commentary from Trump about China. We need to see where this closes but if the SPY loses the 21 ema, you typically want to close up everything you have that you are on the fence about. If it is a longer term hold and not a trade, it doesn’t matter but if it is something you’re worried about, it is best to close it if the SPY looks like it is closing below 663.44. This would be our 3rd close below the 21 ema since this uptrend in April began with the last 2 only lasting 1 session each. This one is particularly violent because this VIX is up 30% which sends a ripple through options pricing, just part of the game when you have a loose cannon at President and he loves to post messages online with no regard to the consequences. The good news is no President loves the stock market more than Trump and like he did in April, he will backtrack soon enough is my best guess. Could this be the first time he follows through and causes pain? Possibly but he always talks this tough game and when it becomes to painful he stops. He is 100% focused on equities going up all the time but this was a good excuse to get a small selloff and we tagged the 21.
The QQQ is also holding on the 21 ema right now.
Look at a chart like BABA below it was foretelling China was weak when it opened under the 21 ema today, there were big sellers exiting the last 6 sessions and now it is down nearly 20% since. This is why you have to understand when a name loses the 21 ema, it isn’t time to “buy the dip” and its actually time to get out if you’re in it as a trade.
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