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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
  • EF SPY: Poised To Move Up Again 0 comments
    Jun 9, 2013 7:41 AM | about stocks: SPY

    Technically Speaking

    RSI- I have picked up a consistent pattern in the RSI indicator. If you'll notice the bottoms that the stock has formed as it continues to move up, each little drop is just below the 50 line which defines the difference between bulls and bears. As soon as the stock is below it starts moving back up. This recent drop has done the same thing and if the pattern holds true the stock should continue to move back up now.

    MACD- I need the MACD indicator to show me the same thing the RSI indicator showing me for the purpose of confirmation. I have what I need! If you look at the bottoms of the MACD moving averages, you will notice that they always end just above the zero line which also separates Bulls and bears. This confirms to me that the stock looks like it's good to continue up because it's billing the bottom again well above the zero line.

    Bollinger Bands-the last two lows dipped just below the lower Bollinger band and rested on the 50 day moving average. This has been the typical pattern while the stock rests on its continued move up. Yesterday's a gap up touched the middle Bollinger band but if the long-term pattern continues I would expect the stock to continue to move up past this early next week.

    Summary-the early signs point to a continuation of the pattern that has been prevalent for months which means the stock looks like it's going to continue to move up at this point. Those are my early observations, but the stock could also be forming a double or triple top and the last peak we see could be its high for the summer. We will watch and see.

    Current Events

    Stocks have hit a bump. Interest rates are rising, there's uncertainty about when the Federal Reserve will ease up on the monetary stimulus, volatility in Japanese markets is rattling investors worldwide and U.S. economic growth remains sluggish.

    China's growth could slow further after data released on Sunday showed subdued activity right across the economy in May in the face of sustained global weakness, raising the possibility of interest rate cuts.

    Evidence has mounted in recent weeks that China's economy is fast losing growth momentum, with sluggish domestic demand failing to make up for lethargic export sales as the country's main trading partners wrestle with their own slowdowns.

    Adam Grimes, chief investment officer for Waverly Advisors, said that the stock market is poised for a bull market that could last for several years, despite short-term concerns that could cause short-term setbacks.

    Appearing on MoneyLife with Chuck Jaffe, MarketWatch senior columnist, Grimes said, "There is a very strong set-up for a long-term bull market, and by 'long term' I mean we could be looking at one of those five-year bull markets from this point. So unless you are a short-term trader, that's where, you want to focus your attention.

    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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