10 Facts About the $SPY Chart- 11/2/14


 Charts courtesy of stockcharts.com and @361Capital


These are the kinds of charts that can trick so many because the only selling pressure at all time highs is the pressure to take profits. The longs aren’t being stopped out for losses if they are placed correctly outside the normal intra-day price noise. The pressure is on shorts to cover their positions and for the people on the side lines that are missing out to get in. It creates a strange surge upward that few new traders understand as witnessed Friday. Of course the support and unity from central bankers across the globe to keep the party in equities going never hurts either.

  1. Equities are back under accumulation currently as an asset class, no opinion or prediction can change that current reality.
  2. The trend is up for stock market indexes on every time frame. Traders that traded the up trend are the ones that made the money.
  3. All time highs are bullish and a second trip to all time highs is even more bullish. It does not get more bullish than virtually everyone who ever bought $SPY and held it is currently in a profit.
  4. The $SPY is very extended above the 10 day sma which increases the odds of a consolidation in price here to give the short term moving averages a chance to catch up. Indexes tend to revert to the mean with prices reverting back and touching the 5 day ema as well.
  5. The market followed through after the bullish signals of the gap and go, the MACD cross, and the 50 day and 200 day moving average break outs.
  6. A logical price target is the $205.00 $SPY price level which coincides closely to the 70 RSI oscillator. At that point the risk/reward shifts against the bulls and long positions where the upside profit potential is not as great as the odds of a reversion to a short term moving average.
  7. All time highs across many sectors:$XLP $XLV $XLI $XLU drove $SPY to higher prices last week.
  8. All time highs in big cap stocks also were key drivers to the $SPY trend upwards $AAPL $PG $GILD $V $PEP $DIS $HD $AMGN $CVS $MMM
  9. These are the kinds of markets and charts that run away from money managers that have a bearish bias and cause them to have to chase performance for the fourth quarter.
  10. We had a gap and go Friday that held. The low of day Friday is the key support level. A close beneath that level will stop me out of my long positions. The best scenario is that we hold the lows of the day Friday and form a price range and then go higher in the following days. There is a lot of pressure on those not on the bull bus to get on and the prices to get on that bus could get more expensive as the bulls already on board have no pressure to sell.