The SPY, which is the ETF for the SPX (S&P 500 Index) triggered an exit sell signal in electronic trading Thursday. Our Buying & Selling Pressure Indicator is now neutral on stocks. The SPX is nearing an exit level of 1395 to 1400 on the SPX.
On 11/19, I wrote 61.8% Retracements are Very Common in Bull markets. If we can rebound from the 06/05/12 lows and add 200 points to the SPX, I am confident we can rebound 35 points from the 11/16 lows to retrace at least to the 20 day EMA of 1395 which coincidently is also an important Fibonacci level.
The SPX will open near the 1395 level. The 1395 to1400 level is where the bears are going to start shorting this market. We are sellers at the open but also buyers of dips in the 1386.95 level of the SPX.
RECAP: Wednesday November 21st: “Exit Signal on SPY”
The SPY traded higher in electronic trading Thursday to close at $139.85 and exit from the 11/08 buy signal. The gain was 1.26%. The off-the-chart measurements last Friday produced a strong a buy signal for SPY, DIA, IWM, DVY and a sell signal for long government bonds TLT.
Long Positions exited: SPY (+1.26%), MDY (+3.05%), XHB (+5.01%)
Short Position exited: TLT (+1.13%).
“Levels Recap” The SPX closed about 2.5 points higher Wednesday in slow trading before the U.S. holiday. The low of the day was 1386.43, midway between our first two support levels. The high of the day at 1390.93 was printed at the close. Immediately after the market closed the SPX futures popped to 1392 to coincide with our first resistance level of 1392.07. Trading was quiet, levels were not really tested. See the November 21 post of pivot points and commentary.
LEVELS: Today November 23rd: SPX S&P 500 Index:
Key resistance level for S&P 500 (SPX) today November 23rd – 1395.59, 1400.00, 1403.32
Key support level for S&P 500 (SPX) today November 23rd – 1386.95, 1383.13
UP 1395.59 1398.26 1400 1403.32 1409.52
DOWN 1390.5 1388.15 1386.95 1385.5 1383.13
SPY – S&P 500 ETF: Level 3 Data Quant Report Buy Signal: 11/08 SPY at $138.04 with a revised exit target at the 0-line of $139.79. Electronic trading Thursday pushed the SPY above our exit level of $139.79 with a 1.26% gain. To sustain this rally the bulls need to hold the 0-line of $139.79, which is now acting as support. For the bulls, the first step is to hold then punch into the $140.00 to $142.00 level. The bears will be entering the market short at these levels causing a hard ride for the bulls. We are now neutral on the SPY.
THE MOST LIKELY TRADING SCENARIO is that we have seen the highs of the year of $148.11. The series of lower highs and lower lows will most likely continue. We are in the middle of a rebound off the $134.70 low that could take us into the $140 – $142. Unless the fiscal cliff issue is resolved the $140-$142 will most likely break down to retest $134.70 or lower.
TLT – Long Term Bonds:
Sell Signal: 11/08 TLT at $125.84 with a revised exit target at the 0-line of $124.42. The TLT closed Tuesday at $124.35, thus exiting our trade with a 1.12% profit. The TLT is a mirror image of the SPY. We are now neutral on TLT. The $124.42 is now acting as support. The most likely trading scenario for TLT is to bounce around the 0-line and trade higher to print a new high in the $128 range. The intermediate direction is up.