SPDR S&P 500 (SPY)

[learningboutinv]

2xer are you planning to buy the close? I am still debating and have been on the sidelines trying to figure out the direction.

Double bottom at the 200EMA? Or are we gonna break down?

EDIT - Actually now looking at it again, if this is a measured move, we could get down to 78.17, the 50EMA before a good bounce up. I guess I will see what happens at the 200EMA. A break of that I'll look to buy with a tight stop at ~78ish.

Candle looks like an inverted hammer in a downtrend which normally sites a trend change.

"If you examine the inverted hammer carefully, it hardly looks like a bullish candle. Prices opened low and then rallied strongly. By the close of trading, however, the stock has given back almost all of the day's gains. That leaves a small real body and a very large upper shadow. If anything, the candle looks bearish. The bulls could not sustain a rally, so the bears took the stock back toward its lows for the day.

So, why should this candle potentially set up an important reversal? My theory is that the inverted hammer is a signal that shorts are beginning to cover their positions.

Here is my reasoning. Since the inverted hammer can only occur after a sustained downtrend, the stock is in all probability already oversold. Therefore, the inverted hammer may signify that shorts are beginning to cover. In addition, traders who have held long positions in the security, most of whom are now showing large losses, are often quick to dump their shares by selling into strength. This will also serve to drive the stock back down."