Last week, we highlighted a slight bearish divergence in SPY and outlined two clear downside targets: a prior downside gap and the 20-period simple moving average.
Price followed the script.
SPY moved lower, pushed through both downside targets, and in the process reset short-term momentum. While the decline may have felt uncomfortable for some traders, it did exactly what healthy markets often do after a major Fed decision — it flushed weak hands and created clarity.
As prices extended lower, RSI moved into oversold territory, setting up a high-quality buying opportunity for disciplined, rules-based traders who were patient enough to wait for confirmation rather than chase headlines.
Now the focus shifts to the bigger question:
Was that pullback the reset needed to fuel a holiday rally — or just a pause before more consolidation?
Seasonally, the market often finds support during the final weeks of the year. But price action, follow-through, and volume will ultimately determine whether buyers have enough conviction to push markets toward new highs.
That’s exactly what we’re watching now.
👉 Find out what comes next in this week’s Market Minute, where we break down the key levels, momentum signals, and scenarios that matter most as we head into the holiday trading period.