SPY daily chart information
Price: $142.91 in lighter than average volume
Bollinger Bands
Hi: 147.27
Mid: 143.74
Lo: 140.21
Action: Touched bottom, heading towards mid

SMA: 
50: 143.37
200: 136.92

RSI: 49 heading up (not as much potential energy, more recently >70 than <30)
MACD: -0.197 (Just broke zero marker, Bearish)
STO: 23.71, 16.92 (Just broke 20, which is bull signal, 16.92 has lots of Potential NRG)

Warning Ratios: VIX/VXV = .94 (very high)


Potential Resistances: 142.85 bot of wave 1 down, 143.37 50 day SMA, 143.74 mid BB, 145 BB[20,1] line, 146 upper channel.


Discussion on action: Price broke through the bottom bear channel and back into a non-panic area of the chart. It is still a descending channel, but in a range that is manageable. To break that required good news on employment, construction and ISM. Additionally China had reported a great PMI numbers, indicating expansion last night. This creates short term psychological surges, which in numbers helped us to rip through that lower channel, which was considered heavy resistance. Follow-up days to big days like today are very hard to predict. Macro news tomorrow on employment at 8:30 and inventories at 10 may determine whether we climb higher or call it a one and done. Fridays have been bad recently, but this was a lot of momentum, elections are next week. 


Technical Analysis: Having just bounced off the bottom of the daily BB and mid of the weekly BB, it would seem more likely than not that we advance upwards. STO suggests that there is considerable potential energy and momentum to head upwards. RSI is mostly neutral to slightly bearish, as the past three wave tops came in lower than the last. Addtionally, RSI is coming down from over 70, not heading up from under 30. Finally, we have the MACD under zero which suggests this is a bear rally. There is a sizable amount of resistance north of pricing and it will take consistent momentum to break each of these lines. 

Conclusion and Suggestions: Last week, we concluded that this is a bear market, but we may receive a bump after 140.4, and this would occur before we reached 139.4. This is that bump, although admittedly larger than I expected. How high it goes is hard to say at the moment, but I will continue to post as that becomes more clear. Today's rally should be viewed as a set-up for a short play. Do not get sucked up into rallying, that is the attempt on all last legs up. We may, although I doubt it for now, touch the highs, but we will very likely not start another leg up before a correction. Again, as the bulls pull this back up, it will contract the Bollinger Band, which will make any next move up or down more powerful.

SPY Daily Chart

SPY Weekly Chart




Leave a Reply.