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

As one can establish from this daily chart, we have been on a healthy up trend since the beginning of September and it is safe to say momentum is with the bulls. RSI confirms this as it is also giving us bullish signs with no sign of turning around yet. Volume is steady. From a technical stand point we are absolutely bullish. We are at the resistance level that would test us but after this, it is the year’s high at 112 and that is a long way to go.

Cullen Roche supported what we see from a technical stand point when he commented on the ECRI Weekly Leading Index: “Everyone’s favorite leading (?) indicator continues to improve along with the equity markets. The ECRI’s Weekly Leading Index rose to 123.8 from 122.5 while the index’s annualized growth rate improved to -7% from last week’s reading of -7.8%.”

It sometimes appears that we are still being manipulated in the markets. Even though the September unemployment figures we worse than expected, the Fed’s decision to support the markets through another stimulus pushed the DOW to 11,000.

But it is not our economy. It is those around us that make things appear slightly better. I believe we are slightly improving at less than snails pace, but people remain pessimistic because we see the pain all around us and know someone who has lost a job.

Corporate profits are improving…because of cutting costs (usually employees) plus slightly improving economy …but mostly due to the investments overseas. These over seas investments make the corporate profits look really good. Better than we are doing here as a whole.

From a long term perspective, we still do not look particularly bullish (yet). We are forming a Symmetrical Triangle (so far) after an extending upward move. The 200 day MA is our top resistance level in reducing volume. The reducing volume may be there because of the consolidating we are doing. This pattern is a continuation pattern, so if it forms we may continue upward. Let’s watch and see. But as to here we look now long term, it does not look like we will continue up for along time.

 for along time.

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