The S&P 500 ETF (SPY) 06-30-10

 

The SPY closed down 0.99 at 103.22.  The magical 1040 level on the SPX was broken today as reflected in the price of the SPY.   The SPY found support at the second price objective of the move down at 103.  The target for this move down is 99.72, not shown on the chart.   For price to move higher it would have to go through 105 and then the first price objective for this move would be 107.  Like the INDU, the 50 day moving average has not crossed the 200 day moving average.   The 200 day moving average is at 111.45 and the 50 day moving average is at 112.17.  All the pundits called the 1040 level on the SPX as major support and if broken look out below.   There is still downside pressure being applied to price at this time, but the indicator is in a very over extended area of the chart.   Price could go lower at this time, but if it were going to make a temporary stand it could be at this level.  When the 1040 level was broken just how much panic was there on the sell side?  How many margin calls will be triggered tomorrow?  As gold is the only real winner at this time, will they sell gold to meet their margin calls? 

Just some thoughts from an old man.

The Dow 30 (INDU) 06-30-10

 

The Dow Jones Industrial Average (INDU) closed at 9974.02 down 98.28.   That is close to down 7 days in a row.  There was no real end of quarter rally that could have been expected.  Now will the be a 4th of July rally.  Seasonality once said that the markets rally into holidays.   What will happen tomorrow and Friday?  Today’s move down went through the first price objective for this retracement and is moving towards the second price objective at 9467.  For price to move higher it would have to go through  10,113 and then the first price objective would be 10,469.   That would be a difficult move to make at this time as the 200 day moving average is at 10,361 and the 50 day moving average is at 10,447.  I rounded off these numbers.    There is a target price on a lower time frame at 9690 and this could offer some support. 

The news has not been good.  The prognosticators under estimated earnings, profits and other data during the first half of the year and now they seem to be over estimating these same numbers.  Friday is another employment report.  What effect will that have on the markets?  In its current mood I don’t think much.   The only saving grace at this time is that the 50 day moving average has not crossed over the 200 day moving average at this time.

The S&P 500 ETF (SPY) 06-29-10

The SPY closed down 3.32 points at 104.21.  The 104 level here as well as the 1040 level on the SPX index seem to be the key levels that everyone is looking at to hold.  If it doesn’t hold then a major fall is expected.  Looking at the chart, price held above the second price objective of  103.15.  There is still downside pressure being applied to this chart and the indicator is still in the over extended area of the chart.  For price to start higher it would have to go through 105.77 and then the first price objective for that move would be 107.97.   One of the indicators looked at by many traders is the 50/200 day moving average.  Right now the 50 day moving average is at 112.62 down from yesterdays 112.83 and the 200 day moving average remains at 111.47. 

Is there anything out there that might help this market rally?  They scream about 10% unemployment, but that means that 90% of the people are employed.   There are currently improved balance sheets for most of the major companies.  Earnings to date have been improving.  The key, I feel, is government action.  Tarp is ending.  They have extended a part of the housing subsidy.  So far it looks like taxes are going to go higher.  One of the countries largest employers will be laying off more and more people in the coming months.  That is, and I lump them, local, State and federal government employees.   How many states are like California, bankrupt?  How will the new banking regulations affect the banks and investment banks?  How big a strain will the new healthcare bill have on the economy?  How deep will deflation cut into prices before inflation takes over?  I have a lot of questions and very few answers?  My Dad told me years ago that you worry about the things that you can do something about and forget the rest.  So that is what I do by trading technically.  Like any good mystery novel, I just follow the money.

Good luck and good trading.

S&P 500 ETF (SPY) 06-29-10

I received some email stating that the my post on the S&P was bullish.  I just re-read the post and don’t see that.  I gave a price that would start price higher and that hasn’t been reached.  I said that pressure was still down, but over extended.  I did warn about the end of the month pressure as well as usual holiday upside action on prices.  Those two facts remain.  Whether it will happen this year or not will be seen only with hind sight.  Once again, based upon the current lows the entry price for the up move remains at 108.91 and the next price objective for the retracement down is still 103.07.   Before the open this morning the E-mini is down 14.50 at 1056.50 so there is no need to worry about the up EP being hit at this time.

Good luck and good trading.

The S&P 500 ETF (SPY) 06-28-10

The SPY closed the day down 34 cents at 107.53.  Price on the daily chart seems to have found temporary support at 106.43, the first price objective for the retracement down.  There is currently downside pressure being applied to price and the indicator is in a very over extended location on the chart.  For price to restart a move higher it would have to go through 108.94 and then the first price objective would be 111.12.  There are just to many things up in the air right now for another bull run to start.  If seasonality is to play its part than price should rally into the week-end.  You have the end of the quarter on Wednesday which should put upside pressure on prices and then the markets usually rally into holidays.  Time will tell.