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John Mylant
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Residing in Colorado Springs, Colorado. Has been trading and coaching using a self-developed option trading system for 10 years. Philosophically conservative, accurately trades weekly options with a strong risk management approach. Well sought after by investors around the world, he teaches a... More
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SPY Technical Analysis
  • ETF SPY: We May See a Pull Back Coming  1 comment
    Sep 16, 2012 2:20 PM | about stocks: SPY, ABE

    Technically Speaking

    RSI- the RSI has been following the SPY and supporting its move. The recent move by the Feds opening up a new QE3 lifted the stocks quite a bit toward the end of the week and now the stock appears to be over bought. Usually this indicates that a pull back is coming. (click to enlarge)

    Bollinger Bands- it has broken through the upper bollinger band and often this signifies a pull back may be in order. This is the first time the stock has pushed through the upper band so far. The SPY still looks strong enough to say it is still bullish.

    MACD- this is the first indicator that has given us any sign of a possible change. We have a negative divergence in the MACD and MACD Histogram. When it stands along like to does, that is usually a sign of consolidation. It does not indicate a pull back as much as it does that the SPY may be done going up for a season.

    This is something to note. From all indications, I would expect the stock to stop moving up like it has been for now. This does not mean it will turn bearish though.

    Current Events

    Data on the housing market in the coming week is expected to show a continuing improvement. Economists in a Reuters poll expect the National Association of Home Builders Index to tick up in September when the data is released on Tuesday.

    Early manufacturing data for September, however, is not expected to be so robust. Both the Empire State index and the Philadelphia Fed index are tipped to show contraction. That would follow the sharpest drop in U.S. manufacturing in more than three years in August, which was also the third consecutive month of contraction.

    Spain would have to apply for a rescue package before qualifying for inclusion in the European Central Bank's plan to buy debt of struggling euro zone members, ECB policymaker Ewald Nowotny said.

    By giving an open-ended commitment to pour money into the market for mortgage-backed securities, the Fed will likely keep on supporting stocks and other asset classes by keeping returns low on MBS. Investors in search of yield will have more reason to buy equities and to lend money to companies.

    Many economists believe people will spend an extra few cents for every dollar of wealth they gain. Because so many people have retirement funds connected to the stock market, a boost in share prices can lead people to spend more money.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: SPY, ABE
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  • pollyserial
    , contributor
    Comments (1113) | Send Message
    Pullback coming -- but we're still bullish. Way to cover all the bases there! ; )
    16 Sep 2012, 10:35 PM Reply Like
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