SPY - Moving forward Cautiously/Megaphone Breakout

14 Feb 2021

Market seems to be showing an air of restraint as it inches closer to the 'cliff' -- everyone has there eyes on the market making a big ole' fat swan dive into the abyss. Volume is ramping up slowly, and major sell offs always occur on the backside of above average green volume. I'm not seeing any indication of this yet. We've been printing a lot of doji's which leads me to believe that a small correction (possibly to the EMA 20) is in the cards this week. The recent flag we broke out of buys us a target of $395. From there? The longer price runs at these highs, the greater the possibility of a breakout above the megaphone pattern. If that should happen, which I currently suspect it will, the entire dynamic of the market is going to swiftly change into a torrent of bullishness like we haven't seen since the late 90s. With increased federal balance sheet spending (massive liquidity), along with global interest (and further liquidity injection) in our market, and skyrocketing inflation, I'm hard-pressed to give any reasons why a massive sell-off is emanant. If and when the breakout does happen, I expect to see massive rotation into value stocks away from growth (dividend) stocks -- at least, until the Fed increases interest rates to break the back of inflation (it will happen, eventually) or starts to lower there balance sheet (it will happen, eventually). If anything, short interest will be so high that there will be enough rocket fuel to create the pop needed to get us up and over the hump. From there, perma-bears are forced to revise their thesis.

14 Feb 2021

Nota

Just a prototype based on current price action and levels: