SPY Drops but Support Saves the Day

SPY started this morning in bad shape dropping below the Sept Support of 420.25 and the 200 day Moving average at 419.21. SPY continued to sell off till the PPT came in and ramped up SPY to 424. The bears finally didn’t cave and pushed it back down to close at the Sept lows. This is now key support that must hold, and we have reestablished resistance around 424.45.

Given we just had a 4.5% sell off and we are testing the lows, chop is very possible here. The bulls and bear will battle to regain control. Below is the chart of the scenarios we are going looking for, the bulls case is chop and a run up to 430. There we would reevaluate the next move but would anticipate it dropping lower. Overall I see SPY getting to 410-408 by end of October, or early December. Our indicators are oversold yet either but all indicators are bearish leading us to look for further downside.

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