S&P 500 ETF- SPY Weekly Analysis (9-5-10)

The S&P 500 ETF ,” that uses the symbol “SPY,” has been influenced by the stock market this week. Its stock price stands at $110.89 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 very nice start to our September moves and ironically September is not a good time for the stock market. Yet the market is up 5.3% the fist week.

We had better than expected unemployment reports for August. So many pessimistic traders were closing out positions.

Sitting at 110.89 we are going to see if the SPY has the courage to challenge the 113 barrier that has haunted it so badly in the recent past past and introduced the three week down turn.

But don’t think last week is a turn around. We are still in a large “range bound” trading pattern because the economy still looks murky. Lat week was a good week, but it is still trading within a range.

We would need really strong news to watch the SPY break through any level to gain long term confidence but I do not beleive it will happen, at least not yet.

Where the SPY presently sits is also (yet weaker) resistance level. Watch to see this week if we bounce off or if we move through.If we can push through, I can see momentum carrying us to 113 level, but I do not see us pushing through that yet until we have more encouraging signs for the economy. But it doesn’t look that way.

I will leave you with some words I read by J.S. in Seeking Alpha: “If we hadn’t seen surprisingly positive manufacturing numbers, the whole market complex could have fallen off a cliff. It was the jolt back to surprise optimism in the data, in a light market in which fewer and fewer players are participating, that gave such a strong push. From a larger picture perspective, this kind of back-and-forth action is entirely consistent with a deteriorating macroeconomic environment in which things are getting steadily worse, with the secular drivers readily apparent, but one in which occasional blips in the data can easily set off low participation hope jags…”

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