S&P 500 ETF- SPY Weekly Analysis (7-25-10)

S&P 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 $110.41 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 had a really nice bullish week and a significant upturn by the end of the week. After identifying a nice well defined trend line, we broke through it on Friday.

Two problems arise here as we look at this chart. First (not on this chart) the volume was not very high, in fact it was smaller than it was on Thursday. This shows there was not much momentum. So a question arises as to whether this can be sustained. Secondly, We really need to see if we can break through that 110 level with some significance. We touched it early in the week but need to break through this level to show any force what-so-ever.

There are some concerns with the economy that still looms. The Conference Board’s Leading Economic Indicators Index slipped 0.2% in June, offering yet another critical sign that the economy faces real risk of continued recession. Two out of the last three months have shown declines.

The plight of our economic dreariness is summed up well by Jerry Slusiewicz from Seekig Alpha when he write: You and I can’t get at any of that free money – but bankers can and rather than lend it out to stimulate American business, they give it to their trading desks to drive up the markets. And that is where we stand today. A mixed to poor economy, with mixed earnings and free money for the banks to pump up the market. Printing money freely so that more is out there to spread around by businesses to create jobs is just not working. The assumption that people will just spend freely is just not happening. Thinking that people with invest and all that extra money will create spending and thus create jobs has all but disappeared.

People are hiding money right now. Some are saving it and some are putting it into bonds. But the money is not being spent freely. Markets may be over bought soon. I would not be surprised if we continued up one more week and then headed back down. We are in a along term trading zone until the second half of the last quarter of the year.

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