Weekly ETF Rewind: Back in Overbought Territory

After a rough start to the week on Asian market weakness, U.S. equities shook off declines for another heady week of gains, with the S&P 500 (SPY) ending higher by another +2.2% for fresh 2009 highs. The largest gainer for the week was Mid-Cap Value stocks (PWP +3.3%), while Agricultural Commodities suffered a mild decline (DBA -1.6%).

(Click Image to Enlarge/ Glossary)

Week Thirty-Five of 2009 features a very busy economic and reporting calendars, including Second Quarter Preliminary GDP readings on Thursday, as follows:

• Yahoo! - U.S. Economic Calendar
• Yahoo! - U.S. Earnings Calendar

Short-term oscillators are again headed into over-bought status virtually across the board after Friday's breakout -- but of course that has not mattered in months and it looks like Goldman Sachs' SPX 1,050 target will be in the cards soon enough. Nevertheless, I suspect that if those same oscillators run too much farther, it may tempt some brief profit taking. Enjoy your weekend!

Comments

[DavyJ:]

Over-bought or not, look at this almost perfect inverse head and shoulders pattern on the weekly chart.

stockcharts.com/h-sc/u...

It's odd that I see no other mention of this, considering how much the head and shoulders pattern on the daily chart was in the news 5 or 6 weeks ago.

Kind of scary if one is bearish.

Or is this another setup to catch the technical analysts off guard?

Aug 22 10:40 PM

[Roger Knights:]

"look at this almost perfect inverse head and shoulders pattern on the weekly ..."

I wouldn't call it almost perfect, mainly because there's declining volume on the breakout above the neckline. Also, the shoulders are very unbalanced.

Aug 22 11:12 PM

[TCK:]

Over bought ?

I have been reading these articles for several months. The technicians will keep calling for a sell off until it happens then claim technical analysis always works !

Aug 23 03:41 PM

[Autolander:]

Guys, watch the volume! If volume isn't supporting the technical pattern, then there is no pattern. TA is based on rules that follow chart patterns. If the rules are not followed, then you should not use TA. I see the visual reverse H & S, but the volume doesn't support it - the theory is blown. You can't use this pattern to forecast a bullish or bearish market. One thing that can be forecast is that the big boys aren't playing here. The low volume suggests hedge funds and day traders. The big boys can change things in a hurry, which will happen when they come back from vacation. Remember to move your stops up, to save your profits.

Good luck traders!

Aug 25 01:02 AM