Technical Analysis: Recent Action In The SPDR S&P 500 ETF Bullish For The Short Term

Thomas Carreno: The SPDR S&P 500 ETF (NYSEARCA:SPY) Technical Analysis now suggests that the sp500 and broad market are in a continued bull mode for the intermediate future.  Yesterday’s price action was historic and an important turning point signal for equity markets.

Yesterday, 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.

Yesterday may go down as one of the most historic technical analysis feats in the markets for a long time.  I wrote in a previous 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.

Yesterday 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 in yesterday does not just end and whimper out.  We must respect the signal the market is trying to telegraph to us on such a trading day.

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 yesterday’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.

Related ETFs: SPDR S&P 500 ETF (NYSEARCA:SPY), ProShares UltraShort S&P500 ETF (NYSEARCA:SDS), ProShares Ultra S&P500 ETF (NYSEARCA:SSO), ProShares Short S&P500 (NYSEARCA:SH),  ProShares UltraPro Short S&P500 ETF (NYSEARCA:SPXU).

Written By Thomas Carreno From Best Online Trades

I started Best Online Trades because I really enjoy trading and I also enjoy writing about   trading.   Writing about trading or trading strategies helps transfer   thoughts  that would otherwise stay in ‘theory’ and helps move them to   more  concrete form for me. And hopefully along the way you will pick   up  something useful as well.  BestOnlineTrades covers many different aspects of trading, from commodities to stocks, from indices to ETF’s.

Leave a Reply

Your email address will not be published. Required fields are marked *