Analysis of the 15-Minute Signal Chart of SPY

Observing Area A (December 26–27, 2024):

1. Signal Accuracy:

• The sell signal marked the peak, accurately predicting the downward trend.
• MACD and RSI transitioned to bearish momentum before the significant decline.

1. Price Action:

• Following the sell signal, the price broke below short-term moving averages and continued a steady decline.

1. Confirmation Indicators:

• Both MACD histogram and RSI showed bearish crossovers, indicating weakening momentum.

Observing Area B (January 5–6, 2025):

1. Signal Characteristics:

• Similar to Area A, a sell signal is triggered at a recent peak.
• The MACD histogram is turning red, and RSI is showing bearish divergence.

1. Momentum Comparison:

• Both areas show overbought conditions before the sell signal.
• The bearish signals in Area B closely resemble the conditions in Area A, suggesting potential downward movement.

Combining with the QQQ Hourly Chart:

1. Descending Channel:

• QQQ is trading near the upper boundary of the descending channel, facing resistance.
• This aligns with the bearish signal seen on the SPY chart.

1. Short-Term Outlook:

• Both QQQ and SPY charts suggest a likelihood of short-term downward movement toward their respective support levels.
• For QQQ, the target is near point B on the hourly chart (lower boundary of the channel).

Market Outlook for the Rest of This Week:

1. Short-Term Bearish Bias:

• Both QQQ and SPY indicate a continuation of bearish trends in the short term.
• Resistance levels are likely to hold unless there is a strong catalyst to reverse the trend.

1. Key Support Levels:

• QQQ: Watch for support near the lower boundary of the descending channel.
• SPY: Monitor key moving averages and previous lows for potential support.

Investment Strategy:

1. For Existing Positions:

• Consider tightening stop-loss orders on long positions to protect gains.
• Avoid adding new long positions until a clear bullish reversal signal appears.

1. For New Trades:

• Bearish Play: Enter short positions or buy put options targeting the lower boundaries of QQQ and SPY channels.
• Risk Management: Use nearby resistance levels (e.g., recent highs) as stop-loss points.

1. Monitor Signals:

• Pay attention to MACD and RSI on both SPY and QQQ for early signs of trend reversals.
• A breakout from the descending channel (up or down) would signal a change in trend and require strategy adjustment.

By following this strategy, you can align your investments with the current market conditions while minimizing risk.