There is no real change in the medium-term or short-term situation for SPY. First and foremost, the medium-term trend remains up as SPY recorded a new high for 2009 this month. Second, SPY is consolidating near the October high and holding its gains. Bears may point to lack of follow through, but we have not seen any serious selling pressure the last five weeks. The prior move was up, which is bullish, and the current move is flat, which is neutral. Positive plus neutral does not equal negative. On the face of it, SPY is simply consolidating its gains within a trading range. The blue lines show the closing high-low range. Look for a close above 111.5 to break the closing high and a close below 109 to break the closing low. I will also point out that SPY gapped up for the fourth time in five weeks. This gap off support is holding and remains short-term bullish unless filled.
Turning to the 60-minute chart, we can see a slight uptrend over the last 4-5 weeks (blue dotted lines). Even though the range is choppy, SPY manages to forge higher highs and higher lows. The most recent gap and breakout at 110.5 reversed the downswing within this rising range. SPY then formed a small flag and broke flag resistance on Friday. Even though follow through was not strong, the majority of gains are holding and this is more bullish than bearish. A break below 110.3 to warrant a reassessment.
About the author:
Arthur Hill, 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
