ChartWatchers

Reflections of May 2008

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

With a huge rally from early March to late May, the S&P 500 ETF (SPY) is trading just above its 40-week moving average and a key momentum oscillator is overbought. The 40-week moving average is the weekly equivalent to the 200-day moving average (40 weeks x 5 days = 200 days). Also notice that the ETF is meeting resistance from this key moving average for the second time in two years. SPY first failed at the 40-week moving average in May-June 2008. SPY hit this moving average in late April 2008 and hovered near the moving average for 4-5 weeks. The indicator window shows the 20-period Commodity Channel Index (CCI), which became overbought for the first time since April-May 2008. For the second time in two years, SPY is trading near its 40-week moving average and CCI is overbought. The 2008 decline got started when CCI moved below zero in early June (blue arrows). This is the CCI signal to watch for a downturn in momentum.

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Arthur Hill
About the author: , 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. Learn More