Chart Traders

[Traderbytrade]

S&P 500 SPDR ETF (ARCA:SPY)


The S&P 500 SPDR (ARCA:SPY) ETF was relatively flat this week, trading much of the time just above $140. Within close proximity is the 52-week at $142.21 from April 2. A significant level like this can often act like a magnet, pulling the price towards it. While volume remains light, it is quite likely the $142 area could be tested and potentially exceeded. Based on current conditions, though, a large rally is unlikely to unfold from current levels. Further rallying is more likely to be short covering and short-term technical buying as opposed to longer term investors and funds wanting to own shares. Evidence of this is the declining volume and also bearish divergence on many indicators. The relative strength index (RSI) has failed to make new highs since the middle of June as the price of the ETF has risen. Yet, price is what matters, and currently it is moving higher. Short-term, a drop back below $139 warns of a correction to $135.50 -the short-term upward trendline. A drop below $135.50 warns that the short-term uptrend is over and the downtrend which began in April is continuing.