With another strong week, the S&P 500 ETF (SPY) surged to a new closing high for the move. The ETF was up four of five days and gained over 2%. Reaction to last week's earnings reports and news was positive overall. With the new closing high, I redrew the Raff Regression Channel to end on Friday's close. The channel adjusted automatically to encompass last week's lows. Support from the lower trendline is now marked around 120. Key support remains with the prior reaction low at 118.5.
On the 30-minute chart, SPY formed a triangle and broke resistance with a surge on Friday. Technically, the triangle breakout is bullish and projects a move towards 124. The height of the triangle (121.5 - 118.5 = 3) was added to the breakout (121) for a target. As a strong breakout should hold, look for a move below 120.5 to question bullish resolve.
Economic reports:
Tue - Apr 27 - 9:00AM - Case-Shiller Housing Index
Tue - Apr 27 - 10:00AM - Consumer Confidence
Tue - Apr 27 - 10:00AM - FOMC Meeting Begins
Wed - Apr 28 - 10:30AM - Crude Inventories
Wed - Apr 28 - 2:15PM - FOMC Policy Statement
Thu - Apr 29 - 8:30AM - Initial Claims
Fri - Apr 30 - 9:45AM - Chicago PMI
Fri - Apr 30 - 9:55AM - Michigan Sentiment
Charts of interest: CLH, CMC, CMCSA, CRK, MATW, SGMS, SVNT, WCRX,
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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