SP 500 ETF- SPY Weekly Analysis

SP 500 ETF- SPY Technical Analysis (6-13)

SP 500 ETF SPY

The S&P 500 ETF ,” that uses the symbol “SPY,” has been influenced by the stock market this week. Its stock price stands at $109.68 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.”

Stocks eked out a gain Friday after struggling all day as investors weighed a better-than-expected reading on consumer sentiment against a disappointing retail-sales report.” So Cindy Perman wrote to end a very interesting week.

Now we are all asking where is the market going from here? We have two ways to look at this. The first we shall look at is the three ways it touched the middle Bollinger Band and then bounced down again. Since we have a well established pattern here this looks like something positive to bet on for the week. 

At the same time though, the recent lower point did not touch the bottom of the bands like the previous two. Could this indicate a weakness in the bears and might we push up through to the top of the bands this coming week?

Support & Resistance

Chris Ciovacco wrote in his column in Seeking Alpha that it is his opinion that…”the present day looks more like a correction than the beginning of the 2000 and 2007 bear markets. We absolutely and positively may be entering a new bear market in 2010, but the odds, based on the information in hand, say the bearish outcome is a lower probability when compared to the higher probability outcome of this being a
correction within a bull market. Support levels refer to areas where greed and fear have tended to offset each other for a time. As a result, prices have tended to congregate in areas when neither buyers nor sellers have full control of the market. We studied past areas of price clustering or congregation to get a better understanding of where the current declines might find a better balance between the desire to sell and the desire to buy.  The takeaway here for us is S&P 500 violations of 1,050 and 1,040 on a closing basis, would increase the need to consider defensive measures. Violations of 972 and 946 would increase the odds of a more lasting decline in the
form of a bear market.”

We have a clearly identifiably support level for the SPY and since it was touched at least three times, it may be strong enough now to stand any assault on it again. If this is the case, we are in for a bullish move for the near future. It may not be strong and long lasting but bullish none-the-less. 

Sentiment does not agree with us though that we will be moving in a bullish direction. Many economists and Investment writers tend to believe we are fully bearish in nature.

Richard Russell of the Dow Theory Letters states;”I’m convinced through many of my studies that the top has been put in and the primary bear trend is again in force.”

U.S.broad money-supply (M3) growth has turned negative, portending a renewed downturn…John Williams’s Shadow Government Statistics, which pieces together the M3 numbers since the Federal Reserve stopped reporting them publicly several years, finds the current 5.9% annual rate of decline to be the most precipitous since the 1930s, signaling an “intensifying business contraction.”

This all means it is very important to watch the market and be wary and cautious with one’s money.” The SPY looks like it might be gaining a little momentum to turn mildly bullish for a very short period of time. But, that does not meant that it will they that way for long.

We are bearish long term and cautiously bullish very short term on the SPY this week.

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