Looking at SPY and today’s price action, here are three reasons why I believe the current trading landscape is a minefield for both the bears and the bulls.
The 3 Whys (The Problem)
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Why is this environment dangerous? We are seeing Wyckoff’s Third Law—Effort vs. Result—in full effect. When volume (effort) is high, but price spread (result) is narrow, it signals an anomaly where the institutions are absorbing orders rather than driving a trend.
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Why are $673 and $675 crucial? These aren’t just lines on a chart; they are the battlegrounds where “Smart Money” has historically stepped in. If these fail, the structural damage to the $SPY becomes much harder to repair.
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Why focus on the “Market Merchants”? In a high-volatility “risk-on/risk-off” flip, retail traders often chase moves. Understanding that you are likely the liquidity for a larger institutional play allows you to pause and wait for validation.
So, how can we navigate it?
The 3 Hows (The Action)
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How to spot the “Tired” Market: Use the Weekly and Monthly charts to identify stalling. Look for rising volume on flat price action—the ultimate sign of a market that has run out of steam.
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How to trade the “Mini-Waterfall”: On faster timeframes like the 5-min, watch for the “open” volume. If a massive volume spike isn’t followed by price continuation, the move is hollow. Wait for the floor to be established (like the $675 floor today).
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How to manage the High-Risk trade: Reduce position sizing and rely on “Parent” charts (Hourly) to set your targets. Do not enter until volume validates the price action at your manual S&R levels.
By Anna Coulling – Creator of Volume Price Analysis
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