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S&P 500 ETF- SPY Weekly Analysis

|Includes: SPDR S&P 500 Trust ETF (SPY)

S&P 500 ETF- SPY


The S&P 500 ETF ,” that uses the symbol “SPY,” has been influenced by the stock market this week. Its stock price stands at $112.39 As we learn in MSN Money Snaphot they write this about the Fund: “The investment seeks to correspond generally to the price and yield performance, before fees and expenses, of AAA the S&P 500 Index. SPDR Trust is an exchange-traded fund that holds all of the S&P 500 Index stocks. It is comprised of undivided ownership interests called SPDRs. The fund issues and redeems SPDRs only in multiples of 50,000 SPDRs in exchange for S&P 500 Index stocks and cash."

You cannot say the market is not trying. We just cannot seem to break that 113 resistance level even though we appeared to try all week.

We do appeared to have formed a nice strong upward movement using the middle Bollinger Band as support. This is positive. RSI and MACD are both showing bullish signs daily. There are no negative divergences. From a technical AA
stand point, it appears we will be bullish next week. 

On a 15 minute chart from Friday, one can see how we dropped quickly on the unemployment news but then during the momentum had us recovering nicely. Will we keep this momentum into Monday?

This will be dictated by what happens on Monday. There are 15 companies reporting earnings.10 of those 15 have consistently beat earnings estimates, so if history proves herself, we should have pretty goof news on Monday's earnings.

But there is more influencing the market. We cannot forget about the news that has haunted the markets:

  • Housing Sector news continues to disappoint
  • Still looking for economic recovery but cannot find it
  • Jobless claims are still vying for our attention
  • And where are the new jobs?

Sentiment is still influenced by the bears, not the bulls. The Pragmatic Capitalist reminds us: Bullish sentiment, expectations that stocks will rise over the next six months, fell 9.6 percentage points to 30.4% in the latest AAII Sentiment Survey. The historical average is 39% Neutral sentiment, expectations that stocks will stay essentially flat over the next six months, rose 4.7 percentage points to 31.4%. The historical average is 31%. Bearish sentiment, expectations that stocks will fall over the next six months, rose 4.9 percentage points to 38.2%. The historical average is 30%.

We are looking at unemployment for August to remain at 9.5% So where are we going from here? 

Presently we have unfavorable economic news colliding with favorable earnings. This may be the schizoid reason for the SPY being unable to break the 113 level.There has been 8 weeks of positive expectations that have not materialized so now we deal with the sentiment. The bulls turned bearish after the report but regained their composure and tried to rally. This week looks bullish coming up, but we would still advise extreme caution.

Disclosure: Hold