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Weekly S&P 500 ChartStorm - Battle Lines Drawn

Jun. 14, 2020 4:57 PM ETSPDR® S&P 500 ETF Trust (SPY)12 Comments
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  • The battle lines have been plainly and clearly drawn as the market failed at a key overhead resistance point, and found support at an equally key level.
  • We can point to a number of short-term risk indicators that highlight the downside possibilities.
  • But equally, there remains significant skepticism on the market by larger investors, with confidence low and positioning light.
  • More volatility and ranging is the easy answer.
  • Nail me down I lean bullish, but either way, the battle lines of support and resistance are there for all to see and manage risk accordingly.

Those that follow my personal account on Twitter will be familiar with my weekly S&P 500 #ChartStorm in which I pick out 10 charts on the S&P 500 to tweet. Typically I'll pick a couple of themes to explore with the charts, but sometimes it's just a selection of charts that will add to your perspective and help inform your own view - whether its bearish, bullish, or something else!

The purpose of this note is to add some extra context and color. It's worth noting that the aim of the #ChartStorm isn't necessarily to arrive at a certain view but to highlight charts and themes worth paying attention to. But inevitably if you keep an eye on the charts they tend to help tell the story, as you will see below.

So here's another S&P 500 #ChartStorm write-up!!

1. Equities vs. Fixed Income: Junk bonds say yay, Treasuries say nay. So let’s first talk stocks which are moving alongside junks bonds - the S&P 500 had an eventful week – failing at key resistance just above the 3200 area while finding support at the 200dma and prior range highs just above 2960. Volatility perked up last week, rallying from 24% Monday to 44% intraday Friday before settling at 36% - the highest weekly close since May 1.

For the S&P500 and (NYSEARCA:SPY), the weekly candle barely avoided a bearish engulfing pattern care of a late-session bounce from 2984 to the 3041 close. The S&P 500 and JNK are about where they were during late May despite a significant loss for the week – a strong rally (some may call it a melt-up) from May 14 to June 8 (+13% on SPX) left plenty of room for a pullback. While overhead supply is in the 3200-3400 range, there is now a respectable demand area from 2800-3000 from the April-May

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