The SPYs are testing support around the very important $260 level. This is where the lows from February through May, October, and again in the first week of December. There is an important difference this time, however. During the prior times they were oversold and now they are not. When markets are overbought or oversold when testing important resistance or support they tend to revert and that is what happened before. When markets get to important levels and consolidate they tend to break through and those dynamics are currently occurring. If it breaks there will probably be a meaningful selloff because there are no clearly defined levels of support between current levels and the $240 level.
Image Source: bullsheadtrading.com
Image Source: Bullsheadtrading.com
Image Source: bullsheadtrading.com
