S&P 500 ETF- SPY Technical Analysis for 6-1-2010

S&P 500 ETF- SPY Technical Analysis (6-1-10)

The S&P 500 ETF ,” that uses the symbol “SPY,” has been influenced by the stock market this week. Its stock price stands at $119.3 As we learn in MSN Money Snaphot they write this about the Fund: “The investment seeks to correspond generally to the price and yield performance, before fees and expenses, of
the S&P 500 Index. SPDR Trust is an exchange-traded fund that holds all of the S&P 500 Index stocks. It is comprised of undivided ownership interests called SPDRs. The fund issues and redeems SPDRs only in multiples of 50,000 SPDRs in exchange for S&P 500 Index stocks and cash.”

We have quite an up and down week behind us going into this weekend. There is no denying the possibility of a bearish formation taking shape here before our eyes. With our bounce off the 200 day MA Friday, it appears the  (at least on a daily basis)
our 200 day MA may now be our resistance level.

Support- If this is the case, out first support level we are going to be watching ins 105.34, and then move down to 101.3. The first level is well defined already. And we believe that this level will stand because we don’t believe the SPY or the rest of the markets are yet in a bearish trend. We believe that they are at the beginning stages of outlining a very large trading zone for the next 3 to 5 months. 

Trading Zone- there are a couple reasons we believe this “Trading Zone” is forming. We were in a very strong bullish pattern with little signs of slow down until we hit the news about Europe and it put us in a tale spin. 

But if you look at the RSI throughout this time period, it never once hit the over sold area. Usually when we have a large downward movement like we have, we get the RSI dipping below the ’30′ level at some time. We have had some drastic moves, but it never happened.

As we formed our bottom, it is staying above that level.

We get an even better view of what may be forming if we look at the weekly chart. This is the first time we can really see the possibility of this zone forming. 

There are a number of formations we could be observing here. We could see our top already formed and the beginning of the second shoulder. Or we could be looking at a couple or more tops before we move down.

But we are looking for a longer term trading zone develop out of this and then a move up ward again before we go down more. We see the sporadic movements and swing still being influenced by what is happening in Europe because of the moronic situations. Andrew Butler writes: “But what’s the big deal? First the government in the USA and now the governments in Europe have committed to “stand behind the banks,” to pay-off their gambling debts and reward their stupidity. And everyone will live happily ever-after, for a while, by which point the politicians who made those decisions will be long gone. So “don’t panic,” this problem is being swept under the carpet and will be “dealt-with” at a later date when the “market” is not so jittery.” But we will have more panic as more comes to light. So we will still have these huge daily swings in the market periodically.