SPY closes within prior day's range after lackluster session
SPDR S&P 500 ETF (SPY) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
SPY ended the week 3.2% higher at 295.44 after edging higher $0.56 (0.19%) today on low volume ahead of tomorrow's Memorial Day market holiday. Trading up to $1.35 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (SPY as at May 22, 2020):
Friday's trading range has been $2.41 (0.82%), that's far below the last trading month's daily average range of $5.15. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for SPY.
After having been unable to move lower than 293.69 in the previous session, the ETF found buyers again around the same price level today at 293.22. The last time this happened on Tuesday, SPY gained 1.70% on the following trading day.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could speed up should prices move above the nearby swing high at 297.87 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 291.95 where further sell stops might get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior low" stand out. Its common bullish interpretation has been confirmed for SPY. Out of 437 times, SPY closed higher 58.58% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 63.84% with an average market move of 0.39%.