Midas Analysis

Trading and Technical Analysis with MIDAS

Catching Major Market Moves with SPY Weekly

 

While MIDAS often provides powerful signals for day trading, it can also produce highly accurate support for long-term investor time spans.  Going back three years on SPY ETF, we can launch MIDAS S/R curves from swing highs and lows.

 

Starting with the lows of March 2009, we can see price retest it in Oct 2011.  This MIDAS curve (turquoise) provides a powerful support, and it’s remarkable that it caught the low of 2011 with an accuracy measured in ticks!

 

We also launch another support curve from April (sea green), which goes on to catch the low of July 2010 as well as August 2011.  The launch point here isn’t as obvious as the swing lows, but it is a minor pullback.  Even if we missed it initially and launched to fit the next major pullback (July 2009), it captures the two major lows just mentioned.

 

A resistance curve (orange) is launched from the swing high in April 2010, and serves as resistance in June and August (also very close).

 

Looking forward, we can use these established curves as major S/R.  Additionally, we can launch new ones from recent swing highs and lows and watch how price interacts with them.   Launching a curve from early October (in blue),  we see today’s price has fallen and apparently bounced off from it.  So far, the support curve seems to have caught the downturn.  If price breaks below the blue curve, we can probably expect a retest of the next major support (green or even turquoise).  On the other hand, if it holds, we should see it form a powerful support moving forward.   The curves also hint we’ll be range bound so long as price stays below the red resistance curve launched at the last swing high.  For a solid uptrend to form, we’ll need a clean break of the major orange followed by red.

 

Of course, it is not possible to know what will happen next.  The market decides where price will go.  MIDAS provides very powerful signals which are often highly accurate, but we should only trade off of them by monitoring how price responds.