These daily SPY updates are short-term in nature and subject to change as new price data and information come to light - which is hourly. The objective of this analysis is education. It is not meant as a recommendation to buy, sell or sell short. The only advice I have is to use this information in conjunction with your own analysis to come up with your own opinions. You, and only you, are responsible for your investment and trading decisions.
On the daily chart, SPY firmed for four days and then surged above 108 on Thursday. Market breadth was pretty good as all nine sectors gained on the day. Small-caps and techs led the advance, which is also positive. Technically, I still consider the medium-term trend down after the support break at 107.5. However, I pointed out that IWM, QQQQ and RSP all held corresponding support levels and their 62% retracements. This makes it a tricky situation with these indices on a different page. Should this bounce extend, the next resistance zone is around 111 (plus or minus a point). This zone stems from broken support, the early February high and a 62% retracement of the Jan-Feb decline.
On the daily chart, SPY firmed for four days and then surged above 108 on Thursday. Market breadth was pretty good as all nine sectors gained on the day. Small-caps and techs led the advance, which is also positive. Technically, I still consider the medium-term trend down after the support break at 107.5. However, I pointed out that IWM, QQQQ and RSP all held corresponding support levels and their 62% retracements. This makes it a tricky situation with these indices on a different page. Should this bounce extend, the next resistance zone is around 111 (plus or minus a point). This zone stems from broken support, the early February high and a 62% retracement of the Jan-Feb decline.
On the 60-minute chart, I am showing the evolution of short-term technical analysis. After the decline from 115 to 105, I started by drawing my retracements and marking resistance based on the prior support zone. The red zone shows this resistance zone around 108-109. After the first bounce, I drew a rising wedge with the pink lines. SPY hit resistance at 108 and broke the wedge trendline. However, SPY held support around 106 three times this week and formed a little triangle (black lines). Yesterday's triangle breakout kept the bounce alive, but SPY remains in the 108-109 resistance zone. I have now drawn a bigger rising wedge and a break below wedge support would reverse this four day bounce.
The US is heading into a three day weekend while the EU heads into intensive meetings to diffuse the situation with Greece. Thursday's announcement was a non-event with nothing new offered. EU leaders offered "determined and coordinated action" to resolve the situation. It was tough talk without any details or actual proposals. EU leaders will likely have more announcements early next week. At this point, the aim is to sooth markets and it may work short-term. Long-term, however, is another question.
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.
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