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Technical Stock Analysis On The Standard And Poors ETF (SPY)

By Fred Stiles

Hardcore stock traders here we go for weekend technical analysis on the SPDR S&P 500 ETF (SPY) for trading Monday, 06-28-2010.

The rationale for why we perform technical analysis on the weekly chart to start with, even if we make money in a much shorter time frame is that first we should determine the trend.

How many times have you been looking at a time frame and you jump in for an entry off a trend line only to be flabbergasted by a move you didn’t see coming? This takes place because the price moves external to the time frame you were charting.

To stay away from becoming fooled like this, you must perform technical analysis on a larger time frame in an effort to establish the trend. That is why we look at the weekly stock chart to begin with.

The weekly stock chart of SPY finished the week with a Bearish Engulfing candlestick. The MACD continues negative on the weekly stock chart. We additionally see a Bearish Head and Shoulders top being created and we are just higher than closing the neckline on behalf of the right shoulder.

Looking closer at the daily chart, we perceive that the neckline closes at approximately $104.90 . We also have the MACD going below the 0 line.

Now YouTube viewer thobbit60 writes, “I concur with your bearish technical analysis. So why not short SPY?” Refuse the impulse to short SPY until the neckline is closed on the Bearish Head and Shoulders top. It too is prudent to get at the very least 1 day of confirmation underneath the neckline on increasing volume. I realize how alluring it is to spring early but you have to try and be patient.

The hourly chart reveals the unexpected transformation in institutional trader emotion starting last Monday, 06-21-2010. Why? What occurred?

To answer that question you have to move back to the gap on 06-10-2010. The bullish gap up occurred as the end result of weekly jobless claims dropping by the biggest amount in more than a year. So the majority of stock market participants held that the economy was still slowly getting better. By 06-21-2010 that all changed with the reports that housing construction is officially in a double dip.

As the week went on, additional bad housing news came by means of the plunge in home sales. Subsequently GDP was revised downward. Being that housing is such a main component of our economy making up 70% of GDP, institutional investors realized that a double dip in the housing market could very well forecast a double dip recession.

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Article Citation
MLA Style Citation:
Stiles, Fred "Technical Stock Analysis On The Standard And Poors ETF (SPY)." Technical Stock Analysis On The Standard And Poors ETF (SPY). 3 Jul. 2010. 9 Apr 2015 <>.

APA Style Citation:
Stiles, F (2010, July 3). Technical Stock Analysis On The Standard And Poors ETF (SPY). Retrieved April 9, 2015, from

Chicago Style Citation:
Stiles, Fred "Technical Stock Analysis On The Standard And Poors ETF (SPY)"

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