Art's Charts

SPY Moves to New High for the Year

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

The uptrend and Santa Claus rally propelled the S&P 500 ETF (SPY) to a new high for 2010. Once again, the tape rules the roost. Broken resistance from the November high turned into first support and held like a champ. There is really nothing much to add on the daily chart because the ETF is in uncharted territory (new highs). Momentum is bullish with CCI firmly in positive territory. Key support on the daily chart is based on the November lows around 117.

101222spyd


On the 60-minute chart, Friday's gap down mysteriously disappeared. Well, it is really not a mystery. Stockcharts.com adjusts for dividends and distributions. SPY went ex-dividend on Friday and this produced a gap down on the chart. By adjusting the historical data for this dividend, the gap disappears and last week's decline looks like a falling flag (again). SPY broke flag resistance, held the breakout and continued to new highs. Broken flag resistance around 124 turns into the first support level to watch. I am raising key support to 123, which is based on the flag low. The bulls reign supreme as long as SPY holds 123 and RSI holds 40.

101222spyi

Key Economic Reports:
   
Wed - Dec 22 - 07:00 - MBA Mortgage Applications        
Wed - Dec 22 - 08:30 - GDP Estimate    
Wed - Dec 22 - 10:00 - Existing Home Sales        
Wed - Dec 22 - 10:30 - Crude Inventories   
Thu - Dec 23 - 08:30 - Personal Income & Spending
Thu - Dec 23 - 08:30 - Durable Orders    
Thu - Dec 23 - 08:30 - Initial Claims    
Thu - Dec 23 - 09:55 - Michigan Sentiment   
Thu - Dec 23 - 10:00 - New Home Sales            

Charts of Interest: Tuesday and Thursday in separate post.

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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.

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