The potential default is causing nervousness and weighing on the markets. The index ( $SPY, $410.25) dropped by 0.67% on Tuesday.
During Tuesday's regular trading session, investor concerns about the potential for a default led to a 1% decline in the Dow Jones Industrial Average, followed by losses of approximately 0.6% for the S&P 500 and 0.2% for the Nasdaq Composite. Our robots also did not perform well in line with the index yesterday, actively opening short positions and closing long positions. Exercise caution as there may be a continuation of nervousness and market decline.
President Biden has instructed his staff to hold daily meetings to address outstanding issues, and he canceled part of his upcoming international trip due to the negotiations, according to the White House.
Investors are anticipating the next developments in these negotiations, given the significant stakes involved and the high level of uncertainty surrounding the outcome, as stated by Sam Stovall, Chief Investment Strategist at CFRA Research.
Treasury Secretary Janet Yellen reiterated her warning that the government needs to raise the debt ceiling immediately. If not, the country could face the possibility of defaulting as early as June 1.
The Stochastic Oscillator appears to be transitioning from an upward trend to a downward trend. Historically, in 50 out of 63 cases where SPY's Stochastic Oscillator exited the overbought zone, the price continued to decline within the following month. The probability of a continued downward trend is estimated at 79%.
Additionally, the Momentum Indicator dropped below the 0 level on May 11, 2023. This may indicate a bearish signal, suggesting potential selling opportunities. In 50 out of 67 instances where the Momentum Indicator fell below 0, the stock price continued to decline within the next month. The odds of a continued downward trend are estimated at 75%.
Furthermore, after a 3-day decline, the stock is expected to continue its downward trajectory. Based on historical data, in 50 out of 62 cases where SPY experienced a 3-day decline, the price further decreased within the following month. The probability of a continued downward trend is estimated at 78%.
Given these indicators and historical patterns, it may be prudent to consider selling the stock, shorting the stock, or exploring put options on SPY as potential strategies.
SPY sees its 50-day moving average cross bullishly above its 200-day moving average
The 50-day moving average for SPY moved above the 200-day moving average on June 27, 2025. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on June 03, 2025. You may want to consider a long position or call options on SPY as a result. In of 68 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for SPY just turned positive on June 26, 2025. Looking at past instances where SPY's MACD turned positive, the stock continued to rise in of 53 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SPY advanced for three days, in of 366 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 436 cases where SPY Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The RSI Indicator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 3 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SPY declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
SPY broke above its upper Bollinger Band on June 26, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
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