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PUBLIC: Price Nearing Support

This is a daily chart of the SPY tracking ETF (S&P500) for the 2nd half of 2016 and 1Q of 2017.  The white arrow is pointing to the rising top trendline created throughout 2016 colored orange intersecting today’s late March time period.  There are two trendlines below it noted for possible support in the future:  1) one in red ignoring the election correction in October and early November but respected otherwise; 2) another in orange creating a channel which includes all 2016 data.  I have seen many charts published by various market pundits and can tell you that BOTH of these lines are being presented as pundits are split on which is the more accurate depiction of market technical analysis.  I’m not going to debate the point of which one is “better,” I’ll just present them both and let the market decide in the future which one is most important!

Here is a close up of the area showing only February and March of 2017 we now that you have the general idea of what has happened from above:

The white arrow has been shortened, but is still pointing to the same TOP orange trendline where it is attempting to create support near $235 on SPY (it hasn’t been tested in March, but I’m fully expecting it to create a bounce when the market reaches it).  As noted in an earlier post, SPY $233 should act as support.  That was based upon the orange trendline (at the time) as well as the Fibonacci 50% retrace noted in TEAL near $233.75.  The 50% Fib is built from a previous all time high around S&P500 2300 to the new all time high of 2400 attained after the Trump speech to Congress on March 1st caused the market to soar.  The market has been retreating since that push up to 2401 and is seeking support before likely resuming the uptrend past the 2401 highs.

The SPY support I am noting for you in this post is the orange trendline near $235 (rising as we move forward), the 50% Fib near $235 (stable moving forward as it is a horizontal line), the 38.2% Fib near $234 (stable moving forward as it is a horizontal line), and the red trendline just below the yellow arrow near $232 (rising as we move forward).  With such a group of OBVIOUS technical support under the market, it is going to take quite a shift in sentiment (relatively bullish currently) or a news event to push price below ALL of those support lines between $232 and $235 in the immediate future.  If price DOES manage to slide through all those areas, the lower orange trendline is a long way down at roughly $221, and there are fellow traders I respect calling for an attempt to revisit the November election trading area!  If support at $232 gives way, catching a falling knife could be a bloody mess for your portfolio unless you have a system to find support to indicate a buying opportunity.  Of course, this blog will be offering some ideas *IF* $232 gives way.  Meanwhile, keep on investing according to your personal plan, especially in your retirement and long term accounts and look for your Market Alert e-mail at the end of the month.

 

 

3 Comments

  1. Dr. J
    Dr. J March 27, 2017

    We opened below $232 SPY on Monday, but the market was bought up (gobbled up, actually) by voracious buyers eager to get a piece of the US Equity market. Support held (so far) as expected. Hope you got a small piece yourself at some point near the lows. Very important to sustain above SPY $236 on this bounce. The end of the week is the end of the month, so look for your Market Alert e-mail over the weekend!

  2. Dr. J
    Dr. J March 22, 2017

    There is also the 50 day moving average near $232 on SPY. Another possible support area. However, that being said, “emotional” sell offs, just like emotional lift offs (like we experienced since the Trump election), do not respond well to “normal” market rules as panic and forced buying/selling prevent the normal order flow to play out. My advice is rather simple: play small on deploying your cash until you can see the market trying to stabilize by only investing relatively small percentages of your available cash. Do NOT take all of your available cash and buy SPY $232-$235 without more evidence of the market actually finding support in that area. There are many very good arguments that the entire emotional rally since November 8th needs to be taken back, and that is a long way below $232!

  3. Dr. J
    Dr. J March 21, 2017

    We went down and tagged between $234 and $235 today (as I write this, the market is still open so anything is possible) in AM trade. We are in the support zone and it is critical we hold above $232 as noted in the post. I personally put some cash to work today, we’ll see if that was smart as time moves onward.

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