S&P 500 ETF- SPY Weekly Trade Analysis (10-3-10)

The S&P 500 ETF ,” that uses the symbol “SPY,” has been influenced by the stock market this week. Its stock price stands at $114.61 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.”

Over almost a full two week trading period we have established a well defined resistance level at 115. For the longest time, our resistance level hovered around the 113 level but now we are a bit higher.If we act the same way we did before, we are looking at a pull back before we can break this level.

This week is the beginning of a new quarter and now the abundance of news may really dictate whether we will move down or continue our inching upward. Friday’s strong market start came after personal income and personal spending data landed better than expected. Can we keep this momentum?

This coming week should be even more dramatic, particularly since the monthly jobs data will be released. Some of the results that will be important not to miss are the consensus estimates calling for an unemployment rate of 9.7% and non-farm payroll jobs gain of 70,000.

The low PE in the SPY can give us an argument for a continued bullish move. 10 year treasuries are also showing a nice conservative profit and that also can argue for a bullish lean.But, the economic recovery is not as strong as expected at this stage, with the most recent quarterly GDP coming in at only +1.7% growth. The majority of the recent economic data is either showing a leveling off of activity or a modest decline.

Between the Bull and Bear scenarios is the Muddle-Through case. Meaning a period of slow growth for the economy and corporate earnings. But growth nonetheless.So we would look for the market to remain in the larger trading zone for the next quarter. We are not looking for a large move in either direction. We are going to be trading in the same zone we have for months. Look for moves up and down, but no extended move in any given direction for more than a couple weeks.

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