The S&P 500 ETF that uses the symbol SPY has been influenced by the stock market this week. Its stock price stands at $107.53 As we learn in MSN Money Snaphot they write this about the Fund:
“The investment seeks to correspond generally to the price and yield performance, before fees and expenses, of the S&P 500 Index. SPDR Trust is an exchange-traded fund that holds all of the S&P 500 Index stocks. It is comprised of undivided ownership interests called SPDRs. The fund issues and redeems SPDRs only in multiples of 50,000 SPDRs in exchange for S&P 500 Index stocks and cash."
This week has defined us in another downward move. Most news was bad and most news was uneventful. We sit at the lower end of the Bollinger Bands with a slight outward bend on each upper and lower band. This could mean a break out in volatility with a downward spiral. Not good for bullish investors (click on chart to enlarge).
There is some writing about something called the "Hindenburg Observation." This is a market observation that just formed last week and when it does, the statistics look like this:
- the probability of a greater than 5% move to the downside (from the date of the confirmation) exceeds 70% within the next 120 days (four months)
- the odds of a panic selloff (defined as a rapid 10% or greater decline) are about 40%
- the odds of a crash (defined as a 20% or greater rapid decline) are approximately 20%
So the news is not very good from this last week and sentiment remains pessimistic at best.
If the news continues to drive the markets down, look for volatility to widen and the markets to drive as far as 102 before it is challenged again by support. Presently it sits on a strong support line so we are curious to see what Monday will bring us.
Disclosure: Author holds positions in SPY