SPY Is In A Freefall: Where Is There Support?
The broadening formation on the chart of the SPDR S&P 500 ETF Trust (NASDAQ:SPY) told us the sell-off was coming. In just three days the price of SPY fell from $422 to $405 and it may fall even farther.
If so, there is a good chance SPY finds support around the $397 level. This level was resistance in March and levels that had been resistance can turn into support levels.
This happens because investors who sold SPY at $397 regret their decision to do so now that it's higher. A number of these regretful sellers decide to buy their shares back, but they will only do so if they can buy them for the same price they sold at. This way they can erase their mistake.
As a result, a large number of buy orders will be placed at $397. If there are enough of them, it will convert the prior resistance level into support. That could happen here.
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