Did You Fall for It?!
Why It Matters
The analysis warns investors that the recent rally may be a false signal, and missing the key support and follow‑through criteria could expose them to further downside.
Key Takeaways
- •Thursday rally was strong but didn’t alter downtrend bias
- •Monthly chart still shows higher‑low structure above 610 level
- •Weekly gap between 570‑575 remains a potential downside target
- •Resistance near 653‑675 and anchored VWAP may cap upside moves
- •Bullish breakout requires 1.5% follow‑through day with rising volume
Summary
In the latest Trade Brigade weekend show, host Matt dissected Thursday’s surprisingly strong rally in the S&P 500 (SPY) and concluded that, despite the flash‑gain, the market’s underlying downtrend remains intact.
He highlighted that the monthly chart still forms a higher‑low pattern, with the 610 level acting as a critical support‑and‑potential‑capitulation zone. On the weekly frame, an unfilled gap around 570‑575 serves as a downside reference, while the 653‑675 corridor, reinforced by the anchored VWAP and volume‑profile resistance, caps upside potential. The recent hammer‑style bar broke the weekly 50‑SMA but did not alter the prevailing lower‑high sequence.
Matt warned that the rally is a “counter‑trend rally” rather than a genuine trend reversal, noting the lower wick’s bullish hint yet emphasizing that the market is still below the 20, 50 and 200 SMAs. He cited 2022’s protracted bear market as a cautionary parallel and stressed that a true breakout would require a 1.5 % follow‑through day with higher volume beyond day four of the rally.
For traders, the takeaway is to respect the 610 monthly support, monitor the 570‑575 weekly gap for downside risk, and look for a decisive follow‑through move before committing long positions. Risk‑reward setups around the 653‑675 resistance offer limited upside unless the market decisively breaks above the anchored VWAP and sustains volume.
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