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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: A Lot Of Resistance To The Move Up 0 comments
    Mar 2, 2013 7:48 PM | about stocks: SPY

    Technically Speaking

    RSI- from the last time I have observed the RSI indicator when the stock appeared to have us ended its first leg up, I noticed that it was still moving up. But this time the RSI is moving down and we have a negative divergence taking place. This observation shows me that the stock may finally have reached the top of its present bullish trend.(click to enlarge)

    Bollinger Bands-just like the last, the stock has touched the bottom Bollinger band and it appears that the stock may have reached a strong resistance level unlike the last move where gap way up after it and it's its first leg of his bullish run.

    MACD- after the same manner MCAD indicator was also moving up last time the stock reached the end of its first bullish leg up. But this present move now I have identified a top in the stock is now moving down this supports the theory that we have possibly reach the top of this bullish move up.


    I am convinced that there are enough signs between the RSI indicator and the MCA D indicator that the stock could possibly have reached its top. Now I know this is a new high so could be struggling to try to push through but the indicators are just showing me that there is a lot of weakness right now and am not sure it can push through its trying to but I am just not sure can at least not right now.

    Current Events

    Next Friday's unemployment report and the hefty spending cuts that look like they about to take effect will be at the forefront.

    Major U.S. stock indexes will make another attempt at reaching all-time records, but the fitful pace that has dominated trading is likely to continue. The importance of whether equities can reach and sustain those highs is more than Wall Street's usual fixation on numbers with psychological significance. Breaking through to uncharted territory is seen as a test of investors' faith in the rally.

    Flare-ups in the euro zone's sovereign debt crisis and next Friday's report on the U.S. labor market could jostle the market, though U.S. job indicators have generally been trending in a positive direction.

    Signs that investors are becoming concerned about the rally's pace is evident in the options market, where the ratio of put activity to call activity has recently shifted in favor of puts, which represent expectations for a stock to fall. The put-to-call ratio representing an aggregate of about 562 financial stocks is 1:1, when normally, calls should be outnumbering puts.

    While lackluster data has been a catalyst in the past for stock market gains as investors bet it would ensure continued stimulus from the Federal Reserve, that sentiment may be wearing thin.

    Markets stumbled last week following worries that the Fed might wind down its quantitative easing program sooner than expected.

    The dreaded deadline for the federal "sequestration" spending cuts has now passed... and we're still here.

    That's the good news.

    The bad news is that the $85 billion hatchet-chop is now leading to indiscriminate furloughs, job losses, and spending reductions across almost the entire federal government, including in programs that most Americans love.

    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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