SPY continued its throwback with a close below 135 and the third down day in a row. This does nothing to change the medium-term trend, which remains up. The gap and flag breakout started it all and the inverse head-and-shoulders breakout forged a new 52-week high. Broken resistance turns into support around 133-134. There is no questioning the breakout as long as it holds.
On the 60-minute chart, SPY retraced 38% of the advance from mid April to early May. The decline formed a tight falling flag and the ETF bounced just above the support zone. With the afternoon surge in techs, the bulls are chomping at the bit as the employment report looms large. RSI dipped below 35 on Wednesday afternoon, which broke then bull range. This is a concern, but SPY is entitled to a pullback after such a sharp advance. Keep in mind that the prior advance (129.5 to 137) was 5.7%.
Key Economic Reports/Events:
Thu - May 05 - 08:30 - Jobless Claims
Fri - May 06 - 08:30 - Employment Report
Fri - May 06 - 15:00 - Consumer Credit
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.
Key Economic Reports/Events:
Thu - May 05 - 08:30 - Jobless Claims
Fri - May 06 - 08:30 - Employment Report
Fri - May 06 - 15:00 - Consumer Credit
Charts of Interest: Tuesday and Thursday in separate post.
***********************************************
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.
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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