Monday, August 1, 2011

SPY Update

Click on Chart to Enlarge

After the early morning sell off today, SPY rallied into the close and remains above its 200 day moving average and also above a tight harmonic support zone at 128.21. The hourly chart indicators are very oversold. There is not perfect bullish divergence on them, but this is a reasonable long set-up here with a stop below the June lows. It may be better to wait for a higher swing low on the hourly charts to give some confirmation of a new possible uptrend on this time frame.

At this point I would really need to see a short-term rally before going short/inverse or a break of the March-June neckline followed by a back-test before going short. Daily stochastics are oversold but without divergence right now. So maybe we need some churning here before bottoming, or maybe the market does actually follow through to the downside. But I definitely would NOT jump in short right here.

3 comments:

  1. Ouch SLV up 4%. CRB index same. Looks as if money is flowing out of equities and into commodities. The price action looks encouraging for a rally in SLV. Especially following yesterday's fail at 39.

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  2. Some of the correlations that have been very consistent most of the last few years have been less so recently. Notably US dollar and stocks, as well as silver and stocks.

    Even if this gets stopped out, keep it on the radar for a re-entry hopefully at a higher level. It looks as if both the US dollar and inversely commodities could complete patterns in the next few days and results in dollar up commodities down. I'll try to post that by Thursday.

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