After toying with a breakdown of key short-term support levels across the board, the markets rolled hard into the close on Friday, setting up very bearish candles in a number of key indexes and equities. The rounded top in the SPY that confirmed on Thursday showed us the power of that pattern in action, with $450 support breaking hard and a close below the 21 EMA for only the third time since June. Important to note, however, that each of the prior times we were back a new all-time highs within a matter of days. The QQQs broke below the 7 day flag pattern that it had been working on, with key support in the $379-$380 area breaking in the final two hours of Friday’s session.
So what now? Today’s price action should tip the market’s hand. We need a break of Friday’s lows for confirmation of a possible correction. Too often in 2021 the markets have had 1-2 day sharp pullbacks and ran back to highs very quickly. This will keep happening until it doesn’t, and we don’t want to be caught heavy long when it doesn’t.