Art's Charts

SPY Unable to Bounce

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

SPY formed a spinning top to signal indecision on Monday. Perhaps more importantly, the ETF surged above 105 in early trading and failed to hold these gains. The inability to hold early gains shows weakness. Buyers were not strong enough to hold gains. Sellers were strong enough to push prices back down. On the daily chart, SPY is trading just above its early October low hold. A move below this level would forge a lower low and signal the start of a medium-term downtrend. The bottom indicator window shows MACD (5,35,5) still below its signal line. Also notice that MACD moved into negative territory for the first time since mid June.


091104spyd

The 30-minute chart shows a clear and present downtrend. SPY bounced above 105 in early trading, but fell back below 104 in the early afternoon. With a new reaction high, I am lowering key resistance to 105.5. It would take a move above this level to reverse the short-term downtrend. I would also look for confirmation with a CCI break above +100. Even though this short-term downtrend is getting overextended, lower prices are expected until the trend actually reverses.

091102spyi

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More