August 3, 2011
Both the S&P 500 Index (SPX) and its tracking ETF the S&P Deposit Receipts (NYSE: SPY) have broken below key support levels.
The SPY closed below its March correction lows as well as its June correction lows on Tuesday, August 2.
The SPX and SPY both have a well-defined bearish head and shoulders pattern in place, using the February rally highs, April rally highs and July rally highs. All of these rallies have now failed, but this latest decline has broken the lows of all of them.
A short position can be entered for the SPY using a buy stop around $128. This is a risky trade though as the SPY has now declined seven days in a row and a bounce is likely no matter what the trend is.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy has a position in the S&P 500 SPDRs.