Don't Ignore This Chart!

SPY Closing in on Important Support

Julius de Kempenaer

Julius de Kempenaer

Senior Technical Analyst, StockCharts.com

On this week's episode of Sector Spotlight, I discussed the chart of SPY, as it is approaching an important support area between 420-425. The updated version of this chart is printed above and, as you can see, the market is getting closer and closer to this important support area. A break lower will most likely trigger an acceleration lower. I am conservatively watching 420 as the trigger. But breaking 424, the October low, will already be a fair warning shot.

The fact that a clear downtrend has already been established above this level only adds to the strength of the move. Lower highs and lower lows are clearly in place, so dipping below 420 will only ignite a new leg in an already existing downtrend.

I am not in the camp of people who see a H&S reversal formation in this chart. Nevertheless, the downward risk is substantial. I am watching support levels around 400 and 390 initially.

--Julius


Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
CreatorRelative Rotation Graphs
FounderRRG Research
Host ofSector Spotlight

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Julius de Kempenaer
About the author: is the creator of Relative Rotation Graphs™. This unique method to visualize relative strength within a universe of securities was first launched on Bloomberg professional services terminals in January of 2011 and was released on StockCharts.com in July of 2014. After graduating from the Dutch Royal Military Academy, Julius served in the Dutch Air Force in multiple officer ranks. He retired from the military as a captain in 1990 to enter the financial industry as a portfolio manager for Equity & Law (now part of AXA Investment Managers). Learn More