Background

• SPY, QQQ, SMH were at all time highs on the back of very strong earnings from AI supply chain companies.
• Chips, Memory and Optical companies were the strongest sectors.
• Inflation had been creeping up slightly to around 4.2% due to gas prices being high due to the Iran War. The market had mostly ignored it assuming the war would end and gas prices would normalize allowing the near Fed Chair Warsh to cut rates.
• Market was approaching a massive IPO in SpaceX on June 12 with the company being grossly mispriced at 1.75 Trill$.
• On June 4th the indexes started selling off with some rotation into XLP, XLF. Some of the selling was attributed to raising cash for the Space X IPO and some of it from taking profits on SMH which had been on a blistering run until that point.

June 9

SPY
Price :
SPY formed a 2nd lower low. Rejected at the AVWAP from peak and broke the 1st low.
Lost 21 day but bounced at the 50. 5% down from the Highs.
Support between 710 – 725 ( 50 day and AVWAP )
For a confirmed trend change, price needs to get above 747.

RSI :
On 30 mins, forming higher lows, while price is forming lower lows. Bullish divergence developing.

Sentiment:
Buyers keep stepping in after selloffs.

June 10

SPY –

Price : Settled near the lows of the previous day. Price is now between the 50 day ema, sma.

RSI: Continues to show bullish divergence on the 30 min.