July 30, 2010
Both the S&P 500 Index (SPX) and its tracking ETF the S&P Deposit Receipts (NYSE: SPY) took it on the chin these last two days, but there are many reasons to be looking for higher highs ahead.
Last week the SPX broke above a declining trend resistance line that has held since late April. This line can be recreated by drawing a line connecting all the failed rally highs from April to mid-July. This break above resistance is bullish.
The 50-day moving average for the SPX has also held well above the SPX since May 5, immediately after the selling began. The SPX is now well above this short-term average.
The SPX reached its 200-day moving average on Monday July 26. This is likely the reason for the selling since that date.
A close above SPX 1114.25 or SPY 111.63 would be very bullish. If this occurs, look for the SPX to quickly test resistance at 1131.23, the prior June rally high.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy has a position in the S&P 500 SPDRs.
Disclosure: The Fibtimer.com (www.fibtimer.com) ETF Timing Strategy has a position in the S&P 500 SPDRs.