Should we still review Charts and Trends or just read X posts?

As a trend following trader, or even as a mean reversion trader, it can get challenging and/or frustrating for the stock market to move based on certain posts on X. Such is the world we live in now. If one can predict the posts, one will do well.

Unfortunately, I do not have the talent to predict posts on X or what new ad-hoc policy will be declared next. So, I have been and will continue to stick to my model and analyze the charts and trending for my trading.

At the end of last week, I did close most of my long positions in my trading account. But did not do anything to my long-term investment account. Last week did turn out to be a down week for all the major markets.

And the VIX again closed above that threshold of 20 which I consider as risk to the downside.

But the returns over 1 week do not give us enough indication of what is likely to happen next. For that I go to the charts and the trending. At a high level, this is how the trending heat map I use looks like right now.

As we can see, none of the markets have their price below the 20-day moving average yet. That is my threshold to consider them short-term bearish. So far that has not happened. However, there are other weaknesses that can be seen in the charts.

Let’s start with the SPY daily chart.

There is good and there is bad in the chart.

From a bullish perspective, the price is still above the 20-day moving average. Plus the price touched the 200-day moving average (yellow) and bounced off it. So, the bulls were successful in not allowing the bears to run away with it.

However, we were not able to stay within the shaded part of the chart where the real battlefield is. I consider that as the battlefield as for 6 months (Oct 2024 to Mar 2025) we stayed in that zone before capitulating below.

That shaded area is where there is lot of trading volume and price had difficulty staying with that are. Of course, that does not mean price will never be able to overcome that. It just means it will need a strong push to get over that hurdle.

So, for now, there is no point going long unless price goes back inside that battlefield shaded zone and demonstrates it is ready for the fight. Note that there is a gap below at 567.5 and unfilled gaps have a strange way of attracting price.

So, one possibility is that price goes below, closes the gap at 567.5 and then resumes its upward movement.

And the other possibility is that the gap below remains unfilled as a breakaway gap. Price uses the bounce off the 200-day moving average and goes back into the battlefield zone to try new highs again.

From that perspective, price is in a neutral territory, and we have to see the next move to decide which direction we can trade.

The QQQ is looking very similar so I will not go over that. But the IWM tells a different story. So, let’s assess the IWM daily chart now.

We can see that IWM never even was able to get over the 200-day moving average. Price has also not been able to take out the descending trendline that connects the high mark to the lower high formed later. In fact, price hit that resistance level and reversed. Also, price was not able to make a higher high. It only made an equal high around the 210 area.

Having said that price could still make a higher low as long as it does not fall below the 180 level and then reverse to make a higher high. So, there is room to go down and still recover. However, the price action most definitely looks weak.

Enjoy the rest of the long weekend and have a great week ahead.