SPY ETF Confirms Break above Recent Resistance

The SPY got a confirmed bullish break above the 113 resistance level.  The volume on the SPY was the robust but by no means record volume.  I would have liked to have seen a 320 million share day on the SPY ETF instead of 217 million.  Still the SPY ETF did show a very strong closing candlestick that closed above the 113 resistance and so for now I have to view this break as valid.

Even if the market gets a sell off tomorrow 9/21/2010 on the Fed Decision, support at 113 is likely to hold ground and would be consistent with the typical market retest of new support.  In fact that would be the most ideal new bullish setup if we get a sell off tomorrow or into Wednesday that touches the 113 level and determines whether or not the 113 level is a red hot bed of coals that are hot to the touch or simply a warm swimming pool that is too easy to fall into.  Markets like to test demand after breakouts, so it could very well be we will get that type of test in the days ahead.

The next most important price swing that I can see is the 5/13/2010 117.68 price swing that will likely be the next one to be tested.

At the 117.68 price level or slightly higher (too hard to say for now) I expect there will be some type of wave of new selling coming in from the old buyers of the late April 2010 top.  At least some of those buyers are likely going to want to get their money back so they can break even.  This should lead to some type of sideways to downward sell phase.  After that sell phase finishes, then I expect the market to gain footing again for a shot at exceeding the 2010 April highs, perhaps by the Thanksgiving holiday 2010.

The potential bearish triple M patterns in the MACD histogram that I mentioned in a previous post have now transformed into potential bullish triple P setups.  The bullish triple P in the MACD histogram on the SPY ETF will be confirmed on a price closing above today’s price high of 114.46.

The Longer Term Charts

I absolutely love the longer term time frames because they help me to get better clarity on the path of least resistance.  The monthly chart of the SPY ETF continues to show that the current candlestick is still in a bullish configuration, with only 8 trading days left in September.

The monthly MACD histogram is now showing a more pronounced bullish triple P pattern which would be confirmed bullish assuming we get a price close above September’s monthly price candle.

This market appears setup to power higher into the end of this year.  Typically the early part of any new advance is where most of the ‘juice’ is.  There is no point in forecasting how a rally above the 2010 April highs would look or be configured until we actually get confirmed closes above the 2010 April highs.  I expect that to happen eventually but obviously not right away.

Posted in Market Timing, SP500, Technical Analysis
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