Trading the SPY

ETF SPY: Looking for a Rest but still Bullish

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we are still bullish on the SPY. It is presently resting, but that does not mean that we cannot still move up. Our Thursday should lean toward bullish influence or rest slightly but we are not expecting anything too bearish.

Bollinger Bands— the SPY rested on Friday, but make no mistake, we are still very bullish as it rides the top of the Bollinger Bands. There is a pattern developing that you can see I have high-lighted in the squares. We are moving up and then resting and then moving up again. This has been he pattern and we will continue to watch for change.

RSI- the can be seen as very strong here because the RSI is slowly and consistently moving up and that shows strength. This supports what we see in the Bollinger Bands. We are very strong.

On Balanced Volume- the trend and is supportive of the RSI and Bollinger Bands. We are very bullish as volume & price continues to increase.

Outside Market Influences-

Look at Europe: Before the summit, German Chancellor Angela Merkel went before her parliament and, in an impassioned speech, basically declared that unless the parliament approved the expansion and leverage of the EFSF the European Union would collapse, along with the decades-long peace that has prevailed.

Words from Martin Wolf for the new ECU Italian President—“The European Central Bank alone has the power to quell the eurozone crisis. You must choose between two paths: the orthodox one leads towards failure; the unorthodox one should lead towards success.” Martin Wolf is by no means alone in his call for the ECB to aggressively shore up the European sovereigns and bank markets. There is a very long line of establishment types throughout Europe who are doing so, though there is a notable lack of German figures.

We should note that the summit decided that the Greeks should also privatize another €15 billion in national assets, on top of the €50 billion they are already supposed to have done, but on which no progress has been made. All the while finding €17.5 billion to fix the hole in their pension funds, which was already so deep that no daylight could seep in.

The Econintersect economic forecast for October 2011 predicts very weak growth. The forecast for November will be released Monday. A more positive note is that there has been a mediocre improvement in the data over the last two months.

ECRI has called a recession. Their data looks ahead 6 months and the bottom line for them is that a recession is a certainty. The size and depth is unknown. Although Econintersect’s data is not yet recessionary (one month look-ahead) – we take this recession call seriously. This week the actual level of ECRI’s WLI index was less bad but still indicating the economy six months from today will be worse.

ETF SPY: Look for Rest Today

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we are still bullish on the SPY. It is presently resting, but that does not mean that we cannot still move up. Our Thursday should lean toward bullish influence or rest slightly but we are not expecting anything too bearish.

Bollinger Bands— the SPY gapped way up and finally pushed through the top of the Bollinger Bands for the first time. We expect to continue moving up. But look for more consolidation before we do because of that gap.

RSI- the RSI, even moved up a bit on strength even though we did not really move any way yesterday. But we did stay to the peak level without going into over sold this still shows us a lot of strength.

Chaulkin Money Flow- the trend continues as money flows into the SPY. There are no new signals to discover today. We are very strong.

Outside Market Influences-

U.S. stock index futures fell on Friday as investors took profits a day after a rally that pushed the S&P to close above its 200-day moving average for the first time since August. On Thursday, the market soared 3 percent after a long-awaited agreement was struck to help contain the region's two-year debt crisis. The S&P 500 is up more than 13 percent this month, on pace for its biggest monthly gain since October 1974.

A summer of modest economic growth is helping dispel lingering fears that another recession might be near. Whether the strength can be sustained is less certain. The economy grew at an annual rate of 2.5 percent in the July-September quarter, the Commerce Department said Thursday. But the growth was fueled by Americans who spent more while earning less and by businesses that invested in machines and computers, not workers.

The market’s quick embrace of the latest effort to tackle Greece’s mammoth debt burden and restore confidence in the Continent’s banks reflected hope that this plan was broader and more robust than previous ones. But skeptics quickly emerged; saying some of the main elements of the plan may not be as good as they looked initially, starting with whether it will truly deliver as much debt relief to Greece as promised, and whether it is sufficient to buttress potentially troubled banks.

It's just over a day old, but as in the past, events may already be overtaking the EU's latest debt deal. Real M1 deposits in Portugal have sunk an annualized 21% over the past six months, similar to that which Greece experienced before it lost control of its economy. M1 data is seen as a leading economic indicator for six months to a year ahead, with Ambrose Evans-Pritchard saying it has accurately predicted each stage of the crisis since 2007.

ETF SPY: Slope Climbing Today!

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we are still bullish on the SPY. It is presently resting, but that does not mean that we cannot still move up. Our Thursday should lean toward bullish influence or rest
slightly but we are not expecting anything too bearish.

Bollinger Bands— the SPY is resting against the upper band and looks like it is getting ready for another move up. This is a very, very strong pronounced bullish pattern. The SPY rides the top of the bands and then rests a bit and continues to move up the top bands. Nice strong pattern..

RSI- the RSI, even moved up a bit on strength even though we did not really move any way yesterday. The doji was indecisive on where to go but still be gained strength.

Balanced Volume- the trend continues and just like the RSI, we moved up on bullish flavored indecision yesterday. People are still very interested in the SPY as it continues to grow on strength.

Outside Market Influences-

The euro and stocks rallied on Thursday after European leaders struck a deal to provide debt relief for Greece, but analysts warned the plan would fail to halt the euro zone's two-year-old debt crisis unless crucial details were resolved soon.

European leaders cajoled bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.

The 17-nation euro and stocks climbed while bond spreads narrowed after leaders emerged early today from a 10-hour summit in Brussels armed with a plan they said points the way out of the quagmire, albeit with some details still to be ironed out.

The U.S. economy likely grew at a faster pace over the summer after a sluggish first half of the year.

Consumers spent more on retail goods. Businesses kept investing in equipment. And U.S. auto production rebounded after supply-chain disruptions caused by the Japan crisis finally started to ease.

For those reasons, economists are forecasting annual growth of 2.4 percent for the July-September quarter, according to a survey by FactSet.

ETF SPY: Europe Looms like a Bearish Canyon on the SPY

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we are still bullish on the SPY. Even though we took a backseat yesterday, the SPY still has strong bullish momentum. Europe will be very important today as they make an announcement later today.

Bollinger Bands— the SPY touched the top and has now taken a step back. If we continue to move up, this is a typical pattern where we hug the top of the band and then move back a bit. This is showing some strength.

RSI- the RSI, still being supportive of the SPY did not move that far on the losses yesterday. Momentum has kept us healthy and at about 56.96.

Balanced Volume- the trend continues to remain high and the SPY is still strongly bullish despite yesterday’s loss. We are following the trend and we have no data that is showing us a slow down yet.  

Outside Market Influences-

Oil prices rose to near $94 a barrel in Asia as traders bet Europe will announce a plan later Wednesday that helps solve its debt crisis.

Benchmark crude for December delivery was up 52 cents at $93.69 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.90, or 2.1 percent, to settle at $93.17 in New York on Tuesday.

The European debt crisis is deeply concerning. If Europe were to be shaken by a series of nations defaulting on their government debt, I am convinced that the continent would plunge into a severe recession. Their recession would trigger a recession of our own, although a less severe one, through a number of links across the Atlantic. Trade: Over $400 billion of our exports in 2010 went to the European Union. We should expect to lose a significant portion of this while Europe is in deep recession.

EU leaders are due to meet again today to try to forge a comprehensive plan to solve the Eurozone debt crisis, but following the cancellation of a meeting of finance ministers and comments from a senior official yesterday, the parley is unlikely to lead to a final agreement, as intially hoped. Countries remain profoundly divided over critical aspects of the deal, including how to boost the eurozone's bailout fund. Making matters worse, Italy's government is in danger of collapsing over EU demands for reform

ETF SPY: Good Earnings keep the Bulls Grazing

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we are still bullish on the SPY. It appears very strong and outside earnings continues to support the bulls with good news. Europe looms in the back ground somewhere. The only thing that can slow the SPY down today would be after hours reports of bad
earnings by some of the larger corporations.

Bollinger Bands— the SPY has decided to ride up the top of the Bollinger Bands as we expected to see after we noticed that the bands were widening will it pushed to the upside. We can tell it is still healthy and bullish because we have not yet seen it push through the top of the bands. The first decisive push through will bring some caution.

RSI- no changes, still very supportive of the move. One note we might take here is the strength of the move. It looks like it will continue taking into account the reading of 63.04. It is no where near what we consider over bought even though it has continually been moving up. This shows steady continued strength.

Balanced Volume- these last two days went up a bit faster than the last week. Will we steady off now? If and when we level out, we will be looking for divergences to give us a sense of direction.

Outside Market Influences-

Texas Instruments (TXN) and STMicroelectronics (STM) reported a fall in earnings yesterday as the weakening economy weighs on demand for chips.

Stock index futures rose on Tuesday, supported by strong earnings from blue chip companies. Chemical maker and Dow component DuPont (DD - News) reported a 23 percent jump in third-quarter profit on Tuesday, helped by price hikes and strong demand for a key paint pigment. The stock rose 2.8 percent to $47.40 in premarket trade. Bankrupt chemicals maker W.R. Grace & Co (GRA - News) also said on Tuesday its quarterly profit jumped 48 percent as it raised prices across the board. Xerox Corp's (XRX - News) profit and revenue rose in the third quarter as the company signed more outsourcing services deals.

Hopes are high that Amazon (AMZN) will deliver a strong Q3 report after the bell today on the back of market share gains and increasing Kindle sales. Many also think there's potential for upside in Amazon's guidance, although concerns exist about the impact of margins of the Kindle Fire tablet computer, which is due to go on sale next month. Amazon's prodigious spending has already hit net income this year, and analysts estimate that while Q3 revenue will have grown to $10.91B from $7.56B last year, EPS will have halved to $0.25 from $0.51.

BP (BP) CEO Bob Dudley has declared October a "turning point for operations and production" following a Q3 in which output again fell due to divestments in the wake of the Gulf of Mexico oil spill last year. But although underlying profit dropped 3.7% to $5.33B, the figure exceeded expectations, while revenues increased 31% to $97.6B.

ETF SPY: Very Bullish but Europe will Enhance or Destroy Momentum

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we are very bullish on the SPY this week as all indicators support the strength of the SPY moving up. At the same time we would suggest caution in trading. Much of what happens in the markets this week will depend on the outcome of European debt talks Sunday and Wedensday.

Bollinger Bands— the SPY is in a very healthy bullish pattern. It has been well above the middle band (20 day MA) and appears like it will begin following the upper band. This may be the beginning of an upward movement for the SPY.

RSI- no changes, the RSI is not revealing much about the SPY for us. It is confirming that the SPY is very bullish, so that is good. It gives us more reason to look this way. The strength very good!

Balanced Volume- interest in the SPY continues to grow. Especially the last 7 or 8 trading days, we have huge momentum taking place here. This shows that we should continue moving up.

Money Flow- at 63.94 we are a healthy bullish beast! Full support of the bullish move.

Outside Market Influences-

Germany's foreign minister says the European Union's treaty should be changed to strengthen the 27-nation bloc's oversight of its troubled members' finances. Leaders should be able to directly intervene in the budgets of member states if they are receiving financial aid but failing to meet fiscal targets. However, his counterparts from Luxembourg and Finland disagreed. They say changing the EU treaty is too big a task to tackle now and the bloc should try instead to strengthen budget rules through existing channels. Wow! We will see what Sunday reveals for Monday trading.

The eurozone's 17 finance ministers have agreed that banks must accept substantially bigger losses on their Greek bonds, and a new report suggests that write downs of up to 60 percent may be necessary.

The report from Greece's international debt inspectors, which was discussed at the finance ministers' meeting Friday, says in order to keep a second international bailout of Greece to the euro109 billion ($150 billion) level tentatively agreed upon in July, Greece's debt would have to be cut 60 percent.

A broad rally swept through the stock market Friday after McDonald's and several other large companies reported solid earnings. The Standard & Poor's 500 index closed higher for the third straight week, its best run since February, as hope builds that a weekend meeting will bring European leaders closer to easing the region's debt troubles.

ETF SPY: Europe Lords over Markets...still!

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we expect a possible gap down to start our session. There are some positive earnings notes, but Europe and China loom much stronger on news influencing the markets. Based upon what we have heard, it looks like a bearish day, or gap down and very little
movement through the day. The size of the gap will determine that.

Bollinger Bands— nothing changed from yesterday but a widening of the bands a little; for the last three days the SPY has pushed the top of the bands. We have ever slight widening as SPY attempts to push itself up. This is important as we wrote about before. The SPY may be attempting to move itself out of this wide trade zone and move up. So we will watch the fight today.

RSI- no changes, still bullish; the SPY continues to move with strength. This is the one thing that we can see as a fight. The SPY continues to have bullish strength as it fights to stay up and not move back down to the lower 112 level. It just does not appear to be where it wants to go.

Balanced Volume- volume continues to remain high at close. There still is a lot of interest in the SPY and money continues to flow.

Money Flow- money went out yesterday but we are still looking for the breaking of support before we really consider bearish strength.

Outside Market Influences-

Fewer people likely applied for unemployment benefits last week, suggesting the job market may be improving slightly. Economists forecast that initial weekly applications dipped to 400,000 from 404,000 in the previous week, according to a survey by FactSet. New applications have declined in the past month, pulling down the four-week average to its lowest level in two months.

Seesawing expectations of this weekend's summit of European leaders remained the main driver in markets on Thursday, with investors growing skeptical again about governments' ability to agree on a strategy to deal with the debt crisis. Though stocks in Europe fell following an earlier retreat in Asia, the losses were limited as investors weigh every rumor and report about the likely make-up of a deal that may emerge at the Sunday meeting.

Oil fell below $86 a barrel Thursday in Asia as further evidence of weak U.S. economic growth undermined the 19 percent gain in crude prices over the past two weeks. Benchmark crude for November delivery was down 54 cents at $85.57 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract, which expires later Thursday, fell $2.23 to settle at $86.11 in New York on Wednesday.

 

ETF SPY: Rising on European Hopes!

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we expect a possible gap down to start our session. There are some positive earnings notes, but Europe and China loom much stronger on news influencing the markets. Based upon what we have heard, it looks like a bearish day, or gap down and very little movement through the day. The size of the gap will determine that.

Bollinger Bands—for the last three days the SPY has pushed the top of the bands. We have ever slight widening as SPY attempts to push itself up. This is important as we wrote about before. The SPY may be attempting to move itself out of this wide trade zone and move up. So we will watch the fight today.

RSI- the SPY continues to move with strength. This is the one thing that we can see as a fight. The SPY continues to have bullish strength as it fights to stay up and not move back down to the lower 112 level. It just does not appear to be where it wants to go.

Balanced Volume- volume continues to remain high at close. There stil lis a lot of interest in the SPY and money continues to flow.

Money Flow- money went out yesterday but we are still looking for the breaking of support before we really consider bearish strength.

Outside Market Influences-

Renewed hopes that Europe is close to agreeing a package of measures to deal with its debt crisis helped shore up market sentiment on Wednesday, sending stocks and the euro sharply higher. A report in The Guardian newspaper in London suggested France and Germany, Europe's two biggest economies, were putting the finishing touches on a massive expansion of the region's bailout fund, possibly to euro3 trillion ($4.1 trillion) from the current euro440 billion.

A double-notch downgrade of Spain's credit rating has piled pressure on European leaders to make convincing progress on solving the region's debt crisis at an October 23 summit. The blow from Moody's Investors Service came just a day after the agency warned France its triple-A rating could come under pressure and as Greeks began their biggest strike in years in protest at a painful austerity drive designed to avert default.

Morgan Stanley, buoyed a solid performances in all its core divisions and a one-time accounting gain, announced third-quarter earnings of $2.15 billion, compared with a loss of $91 million a year ago. The company's profit of $1.16 a share handily beat analyst predictions of 30 cents a share, according to Thomson Reuters. In contrast, Goldman, weighed down by losses on its investments in its own account, reported a loss of $428 million on Tuesday, compared with a $1.7 billion profit a year ago.

 

ETF SPY: Europe Hesitates on Debt & we Fall

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- we expect a possible gap down to start our session. There are some positive earnings notes, but Europe and China loom much stronger on news influencing the markets. Based upon what we have heard, it looks like a bearish day, or gap down and very little movement through the day. The size of the gap will determine that.

Bollinger Bands—having reached the top of the bands, the SPY – twice challenged it and retreated. We have a bit more volatility now with the bands widening a little but it looks like the SPY is poised to move down now within the same trading range. Over a period of days, possibly into a week, we may see it move down to the 111.5 level.

RSI- nothing new to report in the RSI for the SPY still shows bullish momentum at the moment. Yesterday’s steep fall did not bring the SPY down very much. It still showed a bullish resting place above 54. So now, today should give us a better idea of how the market will move. If we remain bearish today we want to see how strong that movement it. Yesterday was a big move but it didn’t show much strength.

Balanced Volume- volume continues to remain high at close. We did not move higher and yet did not move lower: weakness in bears.

Money Flow- money went out yesterday but we are still looking for the breaking of support before we really consider bearish strength.

Outside Market Influences-

U.S. and European markets closed heavily down yesterday and Asian markets are off this morning as investors grow increasingly wary about Europe's debt crisis. Germany's Merkel tamped down speculation that France and Germany are angling to roll out a "shock and awe" plan this weekend, which was rumored to include upping the eurozone bailout fund to €2T ($2.8T) from €440B and recapitalizing banks.

China's Q3 GDP rose 9.1% Y/Y, shy of expectations for 9.3%, and down from 9.5% in Q2. Though the numbers are relatively healthy, it marks the country's slowest growth since 2009 and raises concerns that the eurozone debt crisis and general global malaise are taking their toll on China's momentum.

Hedge-fund traders and other professional investors are finding that a lack of liquidity is making it increasingly difficult to trade individual stocks without causing large price swings.

One day after China Eastern scrapped 24 Dreamliner orders, Boeing (BA) warns of more cancellations. Chinese airlines often act in tandem, and the China Eastern cancellation likely reflects a belief "the recovery in the United States and Europe won't come soon."

ETF SPY: Still Bullish if Earnings Remain Good!

Analysis for short term option trading!

Technically Speaking-

Trade Recommendations- SPY appears to be strong and bullish. The only thing that appears to be able to derail it are a series of earnings that appear to come in less than expected. We would not play the SPY bearish just yet. We may have a dip or even move sideways, but the expectations are still bullish.

Bollinger Bands- the SPY has neared the top of the Bollinger Bands and with the huge rise so fast, we do not expect it to just continue to move up. If we are going to stay within this pattern we will move down. It we are going to continue to rise, we will then we may level off and stay on this higher level we are on now.

RSI- the RSI has been very supportive of this bullish move and does not show any weakness in the move of the SPY yet.

Balanced Volume- at the same time the RSI was strongly bullish, continues to show more and more strength. People are becoming more interested in the SPY. We continue to move high above our support area, very strongly bullish.

Money Flow- money is still coming in strongly. We are looking for the flow to break support before we worry about whether people will move away from the stock or not. SO far we are strong.

Outside Market Influences-

Stronger retail sales and surging profits from Google sent stocks higher Friday. The Dow Jones industrial average turned positive for the year and the S&P 500 index had its best week in more than two years.

Retail sales increased 1.1 percent in September, the biggest gain in seven months and double what economists projected. Retail sales are a key barometer of consumer spending, which helps drive economic growth. It was the latest positive report on the U.S. economy and added to a growing body of evidence that another U.S. recession isn't as likely as many had feared.

A series of encouraging economic reports sparked oil prices Friday, pushing the benchmark to the highest level in nearly a month. Investors shrugged off declining oil demand forecasts that came out earlier this week and focused instead on growing U.S. consumer spending, a rise in bank lending in China and a meeting of world leaders to discuss Europe's debt crisis. "You're seeing one big sigh of relief" across world financial markets, independent analyst Jim Ritterbusch said. "Three weeks ago, it looked like we were definitely headed for a recession."

Barron's rings the bell for financials (XLF), (KBE), saying business is improving even as their stocks go in the opposite direction. The TBTF's, regionals (KRE), trust banks, life insurers - all are cheap based on any number of metrics. "No catalyst?" How about better-than-expected earnings, an uptick in the economy, and even some loan growth? "There could be a stampede back into these stocks," says fund manager Matt Lindenbaum.