SPY moves into a trading range

On the 60-minute chart, SPY broke pennant resistance with a gap up and then moved towards range resistance. With the bigger trend up, this gap-breakout is bullish as long as it holds. Look for a move below 119.5 to throw cold water on the breakout. The blue trendlines show a higher high and lower low this week. These expanding trendlines reflect increasing volatility, which means we could see sharp pullbacks after a higher high (>122) and surges after a lower low (<118.2). Dips bring out buyers that missed the Feb-Apr advance. Profit taking commences after dip-buyers push stocks off support. The combination of dip-buyers and profit-takers results in a high level trading range, which is what we could see over the next few weeks. 



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Charts of Interest: ASEI, EXPD, GERN, GOOG,






This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.