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SPY Chart Review: What’s Next

ByPikerTrader
Published 02/23/2013, 05:28 AM
Updated 07/09/2023, 06:31 AM

The market sold off yesterday right on cue with the overbought signal that was generated on Tuesday. The selling off did cause some technical damage to the bulls latest move, and it will take some momentum to get back above.
SPY
The Downward Move Created New Resistance: Resistance is now defined at 153.28, as this marks the high for the year, coupled with resistance from 2000 and 2007. This level will be the new line in the sand for any future bullish moves. The next key resistance level is at 152.59; this was the breakout level from Tuesday that failed to act as support, and creates an important resistance level. The second level that was mentioned to watch was 151.48, which was also broken yesterday - but barely. This is a more defined support level and if it remains broken represents a short-term bearish sentiment.

Support Remaining to Hold Up Trend: SPY now appears it is pulling back and needs a support level to hit, that will establish enough buying pressure to bounce back. Right now the lows from Wednesday are important. A failure to hold that validates the pullback; 150.25 and 149.51 will become critical if the bulls want to keep momentum . If those fail, a likely stopping point is the 147.18 level which was the breakout level that started the latest climb. This would be a healthy 4% drop for the market.

What’s Next: SPY has slightly worked off its overbought condition and moved toward a bearish basis. A pullback towards at least 149.51 is likely with 147.18 being a more objective target. SPY has enjoyed a great run up over the last two months. A pullback is not the end of the world, but one should be careful if it goes below 147.18.

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