SPY followed through on Monday's bearish Belt Hold candlestick with a decline on Tuesday. The ETF dipped all the way to 135, but a late afternoon bounce pushed it back to 135.73 by the close. The decline to 135 was not a very deep dip – yet buyers took advantage. The medium-term picture remains the unscathed with broken neckline resistance turning into the first support zone around 133-134. A throwback to broken resistance could be in the works here.
On the 60-minute chart, SPY declined from 137 to 135 over the last two days. Stocks gapped up Monday on the bin Laden news, but declined steadily after that. A small sharp falling flag could be taking shape. Really short-term traders can watch for a breakout at 136.20 to signal a reversal. Otherwise, the first support zone resides around 133-134.
Key Economic Reports/Events:
Wed - May 04 - 07:00 - MBA Mortgage Index
Wed - May 04 - 08:15 - ADP Employment Report
Wed - May 04 - 10:00 - ISM Services
Wed - May 04 - 10:30 - Oil Inventories
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:
Wed - May 04 - 07:00 - MBA Mortgage Index
Wed - May 04 - 08:15 - ADP Employment Report
Wed - May 04 - 10:00 - ISM Services
Wed - May 04 - 10:30 - Oil Inventories
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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