SPY 1270

This is an odd little chart. It is SPY, the S&P 500 ETF. Notice the 127 line. That is roughly a 1270 S&P 500 number. Notice that we have more or less ‘held’ at that point on Friday 10th, 17th, and now the 24th. Look back at that last large dip. Gee… just about 1270. Someone likes buying the S&P at that price point. (Though they could change their mind…)

SPY 24 June 2011 Volume MACD DMI

SPY 24 June 2011 Volume MACD DMI

We’ve also got prices pulling away from the lower Bollinger Band. Volume is “up” during the last couple of weeks, and notice volume spiked in the last “dip” bottom. The “news flow” is all about how things are bad and folks are very pessimistic. Lots of talk of shorting. If everyone feels that way, they will already have shorted… so I’m wondering just how much more “downward pressure” is possible here?

News Driven Trades

We have had a couple of “news driven trades” the last couple of days. We had a “multiple witching” Friday 2 weeks ago with lots of futures and options expiration (and frequently a return to the trend mean). The Bernank spoke, and said he was clueless…. about why the economy was still stalled out. So folks would go ‘flat’ into that speech (and the preceding FOMC meeting) and came out of it confused to negative. Then the Greeks rioted some more and we had a Groundhog Day moment over Greek Dept and a bailout… Again… Then we had an oil SPR release announced, so commodity traders were all spooked and diving for cover.

What’s it all mean?

Looks like a “go flat sideways” market to me. We are on “support” but with no upward catalyst unless earnings reports come in positive in the next few weeks. Next week Greece votes on “Austerity Measures”. So either we get more riots, and the Euro drops; or we get Greek default, and the Euro drops. And folks will move into dollars. And US Equities. (or shorts for some).

DMI is still negative (red on top) and no inflection (but wobbling) and with ADX strong enough to say “use MACD”. But while MACD had a crossover to “blue on top” it is very tepid and mostly pointed sideways in a negative value range. That usually means “slowly drifting down” but can also mean “crossover to upside muted by news; going nowhere for a day or two, then moving”.

My take on it all? We’re stuck on about the 1270 line until either folks report good earnings or Greece resolves the value of the Euro. “Volatile sideways” until mid next week, IMHO.

I’m working on a full WSW posting, but this looked like a decent “stand alone” bit. If the S&P is “going nowhere fast” it will be hard to find anything else of interest.

Even moving in to a “fast day trade” 10 day hourly chart is saying the same thing:

SPY 24 June 2011 10d hr Volume MACD DMI

SPY 24 June 2011 10d hr Volume MACD DMI

Roughly 127 to 129 range bound. Just bouncing between them on the news of the day. Last Thursday there was volume trying to catch that rise and the surprise news about oil from the SPR (and what all else was in the news). But that rally failed. (Though I note it didn’t drop back on much volume. Folks who bought on Thurday were still holding on the Friday fade).

Even a day trader would be driven mad by this. Only strategy I can see is “buy at 127, sell at 129” until a breakout. Once it picks a direction, though, ride that breakout direction. So Monday or Tuesday I’ll likely sell if things hit “about 1290” on the S&P 500 and only buy back in if it gets through that price (or short if it starts dropping). Yes, for a while I’m shifting to a bit of day trading mixed with some “bar bell” long term investing in things that look cheap. FWIW, a 10 day 15 MINUTE tick chart looks more usable than any other right now. Nope, can’t make a posting based on that. The time lag is too large. You need to check the chart every 15 minutes for it to ‘work’…

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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