Reviewing the SPY

The SPY ETF representing the S&P 500 is sitting on a well-defined upward trendline in place since October 2022.

The blue line is that trendline. There is expectation from traders who use support resistance levels and mean reversion tactics that the SPY will bounce from there. So, we have that possibility.

The RSI is also indicating close to oversold levels. Note that the markets can stay oversold for a long time. So, I would not consider that as the single indicator that market will go higher from here.

If we look at the moving averages, the 10day, 20day and the 50day are all suggesting that the price keeps going lower. That is another possibility.

The MACD histogram is also suggesting that the markets keep going lower.

That is from the daily chart. Here is the hourly chart.

Here the read is a little different. The MACD histogram is slightly bullish. The RSI has (for now) reversed and the price has gone above the 10-period moving average.

This chart is indicating some strength for the short-term and the SPY price may continue with the bounce for at least a few hours today.

Strategy

So, based on the above, what we do now is totally dependent on the time frame for our trades. For very short-term traders (consider few hours to a couple of days) the risk is to the upside for a bounce. For mid-term and long-term traders (several days to several weeks) the risk remains to the downside.