Time to Buy? SPY Tests Key Support
In last week’s FFR Trading Market Minute, the SPDR S&P 500 ETF (SPY) climbed to a new all-time high. That surge pushed the Relative Strength Index (RSI) above 90. This level signaled extreme overbought conditions.
Soon after, sellers stepped in. Buyers were exhausted, and momentum shifted. As a result, the SPY pulled back to its moving average support, where it sits now.
Is There More Downside Ahead?
The key question is whether this is a normal retest of support or the start of a deeper decline. To gauge that, consider a few factors:
-
Follow-through selling: If SPY breaks below support with heavy volume, more downside could follow.
-
RSI cooling off: A drop from extreme readings often signals a pause, but it does not always mean the trend is broken.
-
Macro catalysts: Earnings, Federal Reserve policy, or global headlines can easily tip momentum either way.
Bottom Line
Markets rarely move in straight lines. Pullbacks are natural, and they often create new opportunities. Therefore, traders should watch this support level closely. If bulls return, the uptrend may continue. However, if sellers gain control, volatility could increase.
(4) Time to Buy? FFR Trading Market Minute for Aug 22 – YouTube