SPDR S&P 500(SPY)

The ETF “SPDR S&P 500” that uses the symbol “SPY,” has been influenced by the stock market this week. Its stock price stands at $106.82. As we learn in MSN Money Snaphot they write this about the Fund: “The fund seeks daily investment results, before fees and expenses, of 300% of the price performance of the Russell 1000 Financial Services index. The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.”

MARKET OVERVIEW- “Sellers reclaimed control of the stock market after it had put together solid back-to-back gains. The change in tone came amid renewed concerns about contagion in Europe and disappointing nonfarm payrolls data.

Stocks entered Friday with a weekly gain of more than 1%, but that was dashed with this session’s rout, which saw the S&P 500 drop more than 3%. That gave the stock market a weekly loss of more than 2% — its fourth weekly loss of more than 1% in six weeks.”

“Trade was also hurt by news that nonfarm payrolls for May increased by 431,000, which is well below the 500,000 that many had expected. Even higher numbers had been whispered in some circles, making disappointment over the number all the more significant. Ultimately, the smaller-than-expected increase in
payrolls overshadowed news that the unemployment rate made a surprise move to 9.7% from 9.8%.”

So the bad news dropped the markets. From a technical stand point, we now have proof that we are in a bearish down trend. Last week we wrote about wild swings in the market and yesterday was a perfect example. We have bounced off the middle Bollinger Bands twice now and this gives the bears a lot of strength as we move down.If you will notice, it ends about where it ended last week. And if you observe the two times that it touched the Bollinger Bands, they ‘touch’ was barely higher than the day before. We could not break through a significant barrier so we are bearish on the SPY.

Since we are in a bearish channel, we expect it to continue down & slightly up through the June options cycle.Watch one of two bounces this next week. We have a very important support area at about 104.55, if we breakthrough that this week, we are defining a deeper move downward & into a much large trading zone than we have anticipated.

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