Chart of the day

Where do we stand fundamentally?

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 index, has shown recent volatility as investors anticipate shifts in fiscal and monetary policy following the U.S. election. Recent analyses suggest a cautiously optimistic outlook, bolstered by expected policies that could drive economic growth. Market commentators highlight a potential "melt-up" scenario, where the S&P 500 could rise significantly due to favorable conditions like anticipated corporate tax changes and infrastructure investments under the re-elected Trump administration.

The ETF has also been buoyed by record inflows, reflecting strong investor interest and confidence in equities. However, some strategists warn of a potential overextension, suggesting that heightened valuations could lead to a correction if earnings or economic indicators disappoint in the near term

SPY is reaching an important 600 which is the channel top and a round number. We need to see a breakout here for an upside extension to 650 and possibly higher. I expect a deeper pullback here for a retest of 575 previously broken strong upside resistance.

We are in the development of the fourth wave short-term before a rally higher in the fifth short-term and long-term wave. Before an extension higher we will see a pullback from here in the short term. Invalidation of a swing lower will happen upon a confirmed break above 600

_{Try a short trade entry with a stop loss above 600 to target 500. You can trade it with options as well.}