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SPY Weekly Analysis (8-15-10)

|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 $108.31 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 A 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."

Ending on a Bearish note because of the influence of the news this week, the SPY (and markets in general) turn down.

The charts do not yet give us a hint of a continued downward turn though. Using the Bollinger Bands, if the stock were to continue down, we would see the bands start to widen because of volatility. But the bands are remaining tight. This could mean that we are not going to move down steadily but remain in that well-defined and tight trading zone.

In terms of where are we going in the near future, one thing we need to remember is there is no news coming soon that we know of that will prop up the markets. Mark Gomes writes about this in Seeking Alpha..."In the coming weeks, I believe we’ll see more signs of economic degradation. With earnings season winding down and the Fed meeting behind us, positive Catalysts appear to be exhausted for now. Barring a surprise government or Fed intervention (unless, barring a full fledged crisis), the near-term Catalysts are likely to be negative, lighting the way to further stock market declines."

There is a possibility of moving up, but the market as a whole still has the bearish sentiment. What to watch next week? Here's some advice from Philip David whom I read regularly: " overriding concern for next week is an oil crash taking us lower or a general commodity crash set off by a big dollar bounce as the BOJ steps in (already happening - as I predicted - and that currency trade would have made a Bazillion dollars already) and tries to get the Yen back closer to 90 Yen to the Dollar. Copper is key as last time we failed 1,070 on the S&P, copper was under $3. It’s now at $3.25 and over $3.20 is considered "healthy" by us while under $3 is bad."

Monday will give s more detail as to where the market is going.

Disclosure: Long SPY