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S&P 500 ETF- SPY Weekly Trade Analysis (9-12-10)

|Includes: SPDR S&P 500 Trust 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 $111.48 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 the S&P 500 Index. SPDR Trust is an exchange-traded fund that holds all of the S&P 500 Index stocks. It is A 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."

We had another positive week even though it did not go up that far, we are inching closer to challenging that strong resistance level of 113. This may be the week!

The momentum can be seen in the slight positive divergence that has developed in the RSI. This may give the bullish hope of pushing up through that 113 level. But at the same time, we have touched the top of the Bollinger Band. Usually when this happens, we bounce back down. 

So where does that leave us?

Bespoke Investment Group put out a great article Friday on using the past to predict the future. It appears that the same range bound pattern in the market back in 1959-60 lead to a whopping 221% increase after the market broke out of its range bound pattern. They write about many similarities in patterns:

"it is interesting to note some similarities. Back then the S&P 500 had just emerged from a recession less than two years earlier (April 1958) and wasn't far from entering another one in April 1960. Today, we are just over one year removed from what most investors consider the end of the Great Recession (June 2009) and in what is at least a slowdown in economic activity. While the majority of investors still believe we will avoid the double dip recession this time around, the 1959 to 1960 example suggests that even if we do go back into a recession (as we did then), a new bear market is not necessarily a sure thing."

Short term, we want to watch and see how we move this week. We want to see if momentum carries us up or we start bouncing. Monday will give us a good hint. Long term though, sentiment is tilting slightly bullish!

Disclosure: Long