S&P 500 ETF- SPY Weekly Trade Analysis (11-7-10)

Technically Speaking…

We had an interesting week. The SPY jumped from 119.07 to 122.72 at the end of the week. That is a 3.65 jump for the week and that is not normal for the SPY to move that high in one week. But we are now at major resistance level. And if we breakthrough this, then we can fly clear up to the 130 level before facing any significant levels again.

Volume- has been steady. 10 of the last 15 days have been bullish and this gives credence to the continued bullish move.

RSI- shows strong signs of a continued bullish move. Very over bought at the present though way up at the ‘80’level. This could lead to consolidation next week. Not necessarily backward movement. We could move sideways for a bit.

MACD- still a very strong pattern. The Histogram floating right in the middle and the levels at 1.49 is steady. We are strongly bullish still.

Bollinger Bands- this is where the strength of the trend can really be identified. We continue to remain above the middle band and this shows a very strong move.

Technically speaking we are still in a very strong bullish pattern. There are no signs of stopping long term and turning around. If we were to give credence to any signs of a bearish move, it would have to be two things. First of all the, we are at major resistance. Secondly, the RSI is over bought and this could mean a slowdown. I do not see a turn around but we can make the case for a slow down now and a bit of consolidating.

Chris Ciovacco confirms what I am seeing in his article on “Seeking Alpha.” He writes: “While the pressures for a correction are building, the long-term outlook for investors remains favorable… The CCM Bull Market Sustainability Index [BMSI] has moved back into healthy bull market territory…We are prepared for both bullish and bearish outcomes. Our bias is to the bullish side of the ledger because, despite the incessant bearish calls, the market’s bias remains bullish from a longer-term perspective.”

Cam Hui writes about the market movement based solely upon momentum because of the Feds intervention. Momentum and momentum alone! My inner trader says, “Don’t worry, be happy! These policies are bubblicious. They are supportive of the asset bubble that the Fed wants to blow, so relax and go with the flow. In that case, this will mean a momentum driven market where fundamentals don’t matter.”

All that is going on in Washington right now will more than likely reveal our long term future in the months ahead. With the lame duck congress and Bush tax cuts needing to be addressed soon, “all of this creates the potential for legislative and regulatory uncertainty. Many business executives have refrained from expanding their permanent staffs or pursuing costly capital projects because of the ongoing uncertainty about the economy. If there is gridlock in Washington, it could compound matters. On the other hand, if the politicians are able to provide clarity on taxes, major legislation and regulations (many of the details concerning both the health care and the financial reform bill have yet to be determined), the economy could be helped.” – (AALL)

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