SPY is short-term overbought and at potential resistance from the February highs, but the overall trend remains up. In last night's Market Message, I pointed out that 15-day Chaikin Money Flow was negative despite a 7% surge the last 15 days. This is extraordinary. Yesterday I also read where bulls in the Investors Intelligence jumped to 57% (15% bears). This is also an extremely high sentiment reading. The tea leaves are aligning for at least a pullback, but the trend is simply not cooperating. SPY continues its stall with six indecisive candlesticks in the last six days. This indecision can be interpreted has neutral at worst. Some sort of downside move is needed to actually forge a reversal. A move below 131.9 would provide the first sign of weakness that could lead to a deeper pullback.
Key Economic Reports/Events:
Thu - Apr 07 - 08:30 - Jobless Claims
Thu - Apr 07 - 15:00 - Consumer Credit
Fri - Apr 08 - 10:00 - Wholesale Inventories
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.
