A little old fashioned reading of price, volume, and lines…Sometimes it is refreshing to use technical analysis, coupled with educated guesses and intuition, to analyze the market.
The support and resistance lines were drawn many months ago, yet they still appear to be working as turning points in this market.
Today’s action pierced the 50 day average, but SPY was able to rally slightly into the close and close above it. SPY has two kinds of support just beneath it: the moving average and the support/resistance line at $122.21.
- Volume closed near its 50 day average, logging the most shares traded in the past 9 days.
- The falling 200 day average is working well as major resistance.
- The 11.30.12 gap still needs filling.
- SPY has retraced less than half of the late November/early December surge.
- Positive seasonality should be considered.
- $VIX closed higher than its open, but still lower than yesterday. I believe volatility will soon increase.
It appears that SPY may have made a lower high last week. I’m not at all confident that support will hold here. One characteristic of the market this year is its ability to travel over a large range before reversing. Therefore, I think it is more likely to see volatility build and the large gap get filled. After a gap fill, I would look for SPY to bounce and begin the next leg of the coil that appears to be developing. Positive seasonality may kick in, reducing volatility, which may allow SPY to close slightly positive for the year.
Bad news out of Europe or increasing tensions in the Middle East may see SPY fill the 11.28.12 gap.
Superb analyisis indued
Nice!
Agreed. I like the upward slope on the 50-SMA as well. I’m also looking at that last gap. If we dip into the gap, I’m still bullish, but a fill at 121.00 would have me nervous.
Downward sloping 200-SMA also has me sleeping with one foot on the ground.
I say that and the QQQ are a few pennies away from a close of their Island Gap. But holy shit on GLD…spanking.