SPY spent most of the day trading above its normal upward trajectory trendline. This is an alarming place for a stock to be in.
Still this may not trigger a larger trend of bearish sentiment, but if any other bad news comes during this short period of downward pressure, it could lead to more pain ahead.
- Stocks growing at faster and faster rates sets the stage for a painful retracement.
- Market makers took advantage of high growth and sold large positions taking profits off the table.
- This sell off may trigger more selling by retailers that have gotten spooked by the sudden drop
- Stop losses may get triggered prompting more selling.
- I expect to see a couple more selling momentum candles atleast as a reaction to this move.
Still this may not trigger a larger trend of bearish sentiment, but if any other bad news comes during this short period of downward pressure, it could lead to more pain ahead.