The SPY broke out above the neckline of an inverted head and shoulders pattern this week. However, the breakout failed to follow through and was turned back on slightly larger volume today.
It's a good idea to lighten up on all long positions that are underperforming. We are unsure if this gives us a good short set up. From failed moves come fast moves, so there is some potential that short positions will work here. However, with the flattening 20-day average one has to wonder if we aren't just in for a period of consolidation rather than another sweep lower.
In any case, it's best to exit recently opened longs and wait for better entry set ups again rather than to get agressive in either direction here.
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