6/2/26 Recap
The SPY continues this stairstep higher, you can’t really say anything other than lighten up where you want into this strength. We are just cruising 3% over the 21 ema with seemingly nothing to stop us. That’s usually when you get this big red candle out of nowhere, but even then, we are fine as long as we’re over that 21 ema but nobody would ever fault you for selling into this incredible 2 month uptrend we’re in. Right now the big risks would be either inflation ramping or some sort of negative AI news or oil spiking because of Iran, those would be the 3 major concerns that could derail us at this moment. We’re up nearly 20% in under 2 months, that is an all time move.
One of the big questions I get all the time is about the 21 ema and why it is the indicator I value most. Take a look at this INTC chart below, hard to say anything negative about INTC, the stock went from $40 to $132 in the span of 2 months. Now though, yesterday was its first open and close under the 21 ema, look how hard it fought to stay above and it just couldn’t. What happened next? A followup gap down. Does this mean INTC is in trouble? Not long term, no, it just means its going to be weak until its not. It means that until it reclaims the 21 ema, the computers have flipped are now net sellers and you probably shouldn’t be in it, unless you enjoy pain potentially because down here it can go lower. Again, it doesn’t have to, but now that door is open. When you’re above the 21 ema you’re in a position of strength because your name is over the 1 month moving average and short of some overnight surprise you don’t have much to worry about. So your objective in markets if you are positioning yourself short term is to always be in strength. If you remain in a chart like the one below, you’re asking for it so to speak near term. Now if its a position you want for the long term, short term moving averages are of no importance, this is only relevant if you’re looking at what to trade with short time horizons.
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