The $SPY chart is overwhelmingly bullish and crossed into all time highs. (Based on the $SPX chart. I do not count the $SPY crazy ramp candle to $211.80) The only concern is where the profit taking will be. When will the $SPY reverse and begin to start hitting stop losses? Where are the dip buyers likely waiting to get in, after the majority balked in front of Greece exiting the Euro?
- $SPX is in all-time high territory. This is as bullish as it gets. All the holders of $SPY are sitting on profits, with no hurry to lose their seat on the bull bus. A lack of selling pressure, due to holders sitting tight and letting profits run, is one thing that creates momentum.
- $SPY has closed above the 5 day ema for 4 straight days, after the quick pullback to the 50 day moving average. This is the strongest of trending signals. Look for eager dip buyers to get in at this key, moving average.
- The break over the 50 day on February 3rd was a bullish signal.
- The MACD also indicated a bullish crossover; the same day as the 50 day line breakout.
- The RSI also crossed over the middle line at 50 on February 3rd, creating a triple bullish signal.
- The pullback to the 50 day line and bounce was bullish. (That was my personal entry level using $SPXL)
- $SPY is now trading above all moving averages at these levels.
- There is plenty of room to run based on the RSI only being at 62.38. RSI 70 is the level to start being cautious and take profits, as that indicates possible overbought levels for equities. RSI 70 is where the risk/reward ratio begins to move against the bulls.
- A close below a previous day’s low will be a first warning signal that we could begin to reverse.
- Headline risk is still present, and something unexpected coming from Greece could send the market down quickly. Currently the market appears to have priced in a non-event with Greece. It is possible that we still rally on a resolution, as so many are on the sidelines needing to get back long equities. Equities are currently under accumulation.
— Steve Burns (@SJosephBurns) February 9, 2015