S&P 500 ETF- SPY Weekly Directional Analysis

The S&P 500 ETF ,” that uses the symbol “SPY,” has been influenced by the stock market this week. Its stock price stands at $106.86 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.”

Our week showed us the downward trend that we have continually been in. If you look you can see a well formed head & shoulders pattern. If this pattern persists, we may be able to dip another 12 points down to the “92″ level which we haven’t seen since July of 2009.

If we are looking at the SPY to trade we need to understand the sentiment of the investors. With the bull/bear ratio at 29.9% bullish it is not good. “ChartCraft’s weekly survey of newsletter editor sentiment shows a continuing drift towards more pessimism but it has already been under the level it was in November 2009 for quite some time.”

The TPS Sentiment Chart (that shows the S&P 500 ETF SPY weekly sentiment is extremely bearish. Checking in with the extremely jittery TSP Sentiment we find it once more dipping into extreme territory with 60% bearish and only 29% bullish. According to the predefined rules, the TSP has given a buy signal within a bear market. But since it is as skittish as a long-tailed cat in a room full of rocking chairs, we may find it zooming back into optimism by next week.

Erik Curry from Seeking Alpha writes about the cycling market and say; “The current cycle is only 8 weeks old, but the breakdown in early August suggests that the high of the cycle has already occurred, providing additional evidence that a new cyclical downtrend is in progress.” So it appears that most writers & investors are keeping the bearish move alive.

If you are trading this week, keep in mind the bearish sentiment and develop your trades accordingly.

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