SPY Technical Analysis November 30 2011

Today the SPY ETF performed almost a miracle.  The SPY rocketed higher on the last day of November essentially completely negating the monthly bearish outlook for the market and also turned the quarterly bearish outlook into a constructive one.

Today may go down as one of the most historic technical analysis feats in the markets for a long time.  I wrote in yesterday’s post that the market needed to blast up into the sp500 equivalent 1240 to 1250 range to negate the bearish longer term potential of the market.  The marked delivered on this seemingly low odds scenario.

The monthly price candlestick on the SPY now has finished as a reversal doji hammer which is a bullish sign and much more constructive as we move into December 2011.  It strongly raises the odds that the market can perform well to the upside in December 2011 and perhaps beyond.

SPY Downside Volume was a Clue

The recent SPY downside volume on the recent multi day decline was light and limited.  This was a clue that the market would not have enough steam or energy to continue a bearish trend.  Of course now this is said with the luxury of hindsight.  Still, volume patterns on the SPY were hinting that the decline was not real.  Also the recent declining SPY volume should be taken within context of the other two major volume surges in early August 2011 and late September 2011.

Today was possibly the final signal needed that the bearish trend since May of 2011 is over.  A sign of strength so large and obvious as seen today does not just end and whimper out.  We must respect the signal the market is trying to telegraph to us on such a day as today.

BOT Long Signal at 1250 sp500 and 125 on the SPY ETF

At this juncture I have to switch to a longer term BOT long signal based simply on today’s change action alone.  The market has spoken and it appears this market has much higher targets now as we transition from 2011 to 2012.

The most challenging future level is 1350 in the sp500 and 135 in the SPY ETF.  The SPY technical analysis suggests that these levels will prove challenging but should eventually be broken through after some testing action.

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