Scott Redler

SPY Rally Falters, Defensive Positioning Needed Now

📺 MARKET TREND SHIFT? WHAT YOU NEED TO KNOW We may have a potential shift in the market $SPY character after an extremely strong rally. The fast-moving bullish “active sequence” may end and turn into a more corrective phase. So, traders may need to become more defensive and adaptive as volatility rises and key technical levels begin to weaken. Conditions have definitely changed enough to require different positioning, tighter risk management, and closer monitoring of macroeconomic indicators such as interest rates $TLT and #crudeoil prices $USO. * On Friday, $SPY tested the 8-day moving average intraday after holding it for most of the rally, trading below Friday’s low around $738. If $SPY could not reclaim $738 quickly, the “active trend” likely changed. The 21-day sits much lower, creating a “void” or open downside space. The same logic is applied to $QQQ. It held the 8-day on Friday, but the key support level around $755 has now been breached. If weakness accelerates toward $696, that may become an area to reduce hedges and look for stabilization. We should see whether this is a brief one-week correction or the start of a larger two-week, or potentially more meaningful, pullback. * Now, the major focus this week is the bond market, particularly $TLT, which tracks long-duration Treasuries. Interest rates are becoming increasingly important because the market may be approaching “threshold” levels where higher yields begin to materially damage equities. Why? During much of the rally, rates rose, but stocks ignored it. $TLT kept falling while equities continued climbing. However, once rates hit new extremes, algorithmic and computer-driven trading systems may react much more aggressively. We've seen this earlier with the oil spike. And now, $TLT and rates may become the new dominant market indicators. If $TLT breaks lower toward $83.59, markets may struggle to tolerate those interest-rate levels. * Oil is the second major macro risk factor. It could matter again if crude continues higher. If $USO breaks above $151 and oil makes new highs, that would likely intensify market pressure. Higher oil raises inflation fears, higher inflation pushes yields higher, and higher yields pressure equities, especially after a highly extended rally. * So, we may be entering a more fragile phase after an unusually powerful uptrend. Respect the 8-day, adapt trading style if the trend weakens, use hedges appropriately, watch #TLT and oil closely, and avoid becoming emotionally attached to bullish narratives. * If you found this helpful, please ❤️like and 🔁retweet