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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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  • ETF SPY: Watch Bullish Momentum Continue  0 comments
    Jan 20, 2013 8:51 AM | about stocks: SPY

    Technically Speaking

    RSI-since its last move down at the turn of the year, the RSI indicator has been very bullish and I believe it will remain that way. The move is very strong and it is just below the over bought position at 69.48. Momentum continues to move up so I would not be surprised if it does become over bought this week. But I do not believe this will cause a pull back just yet. (click to enlarge)

    Bollinger Bands-after the gap up at the turn of the year, investors look to see if the gap will fill. It did not! The stock moved up and since it is hugging the top of the upper Bollinger band (almost) it is showing that it is very strong and continues to look like it will move up.

    MACD-The MACD MA's continue to climb with momentum and are parallel to each other and this appears to mean the stock will continue to move up-- at least this week. When it does peak, that could signify a pullback, but I do not believe that will occur this week.

    40 Day MA-the stock is climbing quickly and this can be seen in how high the stock is above the 40 day MA. It climbs much higher so I would expect the stock to slow down (even for a short rest) in the next two weeks.

    Current Events

    Markets are closed Monday for the Martin Luther King holiday. There are just a few economic reports, including existing home sales Tuesday, weekly jobless claims Thursday and new home sales, on Friday. President Barack Obama is inaugurated Monday.

    Richard Bernstein, CEO of Richard Bernstein Capital Management, said he expects the debt ceiling and budget issues to be resolved better than many expect. As for Congress, "I think public opinion is getting to the point where the debt limit thing will solve itself," he said.

    The Dow Transports, however, rose 2.2 percent to an all-time high of 5695, a move that is being watched with an eye on the Dow. If the Dow now recovers the 3.6 percent needed to reach its all-time high, some traders believe that confirming move of the industrials would signal further market gains.

    CEO Caution

    The final quarter of 2012 treated Corporate America well, as most companies inaugurated the New Year with a batch of quarterly earnings that beat the market's lowered expectations. Still, most corporate chiefs say uncertainty remains the order of the day. High stakes policy skirmishes in Washington loom, which some fear could undermine the U.S. economy's budding recovery.

    CEO James Gorman said a stock market rally could "still move higher" should Congress and the White House find a way to resolve the policy gridlock. The macroeconomic trends favor stocks.

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

    Stocks: SPY
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