Markets Closely Watching S&P 500 ETFs As They Rally To Top End Of Trading Range

Includes: IVV, QQQ
by: John Spence

Technical traders will be closely watching S&P 500 exchange traded funds to see if they can break through the upper limit of their recent trading range after the summer sell-off.

The iShares S&P 500 (NYSEARCA:IVV) rose nearly 1% on Wednesday as stocks continued to rise on hopes the eurozone can get back on track and resolve its debt crisis. Concerns over a double-dip recession have also faded a bit.

“From a technical point of view, the Standard & Poor’s 500-stock index has traded roughly between 1120 and 1220 since early August. Breaking above 1220 is the next major milestone technicians are watching closely, as it could lead to further gains before year end,”’s MarketBeat reported Wednesday.

The S&P 500 ETF has climbed above its 50-day moving average but remains below the 200-day.

“The S&P 500 last week briefly tumbled into bear-market territory, broadly considered a 20% drop from a recent high. But the index has quickly recouped some of those losses, advancing about 10% since the Oct. 4 intraday low,” according to MarketBeat.

Tarquin Coe, technical analyst at Investors Intelligence, on Wednesday said the 200-day exponential moving average could act as resistance for the S&P 500. “The general trend since the May high is down and the range of the past three months lacks the form of a healthy base as it’s too asymmetrical,” he wrote in newsletter.

The Nasdaq-100 and PowerShares QQQ (NASDAQ:QQQ) have already risen above the 200-day moving average. However, the Nasdaq ETF trailed the broader market Wednesday as shares of Research in Motion (RIMM) and Apple (NASDAQ:AAPL) weighed.

StockCharts noted QQQ has gotten cold feet at a key resistance level, and some momentum indicators suggest the ETF is overbought.

Click to enlarge