Here are some quick charts for SPY on this Sunday before what could be a very interesting Monday!
The first chart show the Fibonacci lines anchored on the lows of 2010 and highs of this year. We can see that on Friday we bounced off the 50% retracement line after a very shaky day. A correction to the 61.8% line (around 115) would actually make sense historically.
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On the technical side, we have some positive signs and some scary negative ones. Below are charts for Stochastics (15,3), MACD (12,26), RSI (15) and OBV.
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Stochastics are showing a bounce after Friday's action which reflects the fact that we finished way off the lows of the day. But the other indicators are not so optimistic. Clearly, MACD is usually lagging. But look how OBV cratered on Friday! We are at lows going back to July 2009 except that OBV was on the way up then, not down!
At the same time, we are clearly way oversold and indicators such as RSI are at level not seen since last July and we did bounce from there. But I could not predict a bottom here. This is looking very much like last May and June when we had a couple of big down days (4 days with over 3% losses including 2 over 4%) and then some rallies, but it took 4 attempts to make a bottom and we lost more than 15%... A similar loss would put us around 117.
[Update] - One more chart to illustrate where we are now:
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The dotted parallel lines are a standard regression channel with a width of 1 Standard Error on each side. This covers 200 days. The red, blue and green lines are associated with a n-th order Polynomial fit (in this case 3rd order) with channels at 1 and 2 Standard Errors on each side. In both cases, we are way outside the channels which does not happen that often.
Here is a daily chart of SPY with from top to bottom William %R, TRIX and RSI. I have circled in green the last lows for TRIX and RSI and these go back to last July! These indicators are not standard, they are adaptive and smoothed but the actual ones will show something similar!
So yes, we are currently oversold and the last time it was that bad, we bounced back 6% in 5 days. So there is hope! On the other hand, macro conditions are not exactly conducive to a big bounce!
I wanted to follow up on that post with updated charts. Since the last charts, some averages have caught up while one in particular has opened up a wide gap - DIA. It is safe to say that for that index, the last week's move looks a little fake as it was not confirmed by volume. Volume on the other hand seems to confirm the IWM move! We'll see how that pans out over the next couple of days!
DIA
SPY
QQQ
IWM
Large move with low volume are less meaningful. Today's move is another example. Look at the chart below. I charted SPY with a standard moving average and a volume weighted average. The standard average points up after today, but the volume weighted average stays flat! So not a convincing move...
And the DIA is even worse... The volume weighted average points down!
Here are some updated weekly charts to track the progress of our indices. All of them have bounced of the first Fibonacci line and the DIA and IWM are not making new highs for the year. SPY and QQQ are lagging!
DIA
IWM
SPY
QQQ
Here are some updated charts for the major indices. They show that we successfully bounced off our first Fibonacci line of support following the "Japan" selloff! QQQQ is definitely the laggard here. It is well below the 50 day MA. SPY will have to hit against it today. Something to keep in mind!
DIA
SPY
QQQ
IWM
Following up on some weekly chart that I had drawn earlier, it seems that we have hit a major resistance point both in SPY and IWM. The chart below show Fibonacci extensions using the lows of April 2009 and the retracement of April 2010 as bases. Right now, both IWM and SPY sit right below the 61.8% extension. Many books identify that line as the most important Fibonacci level. Breaking through would be bullish. If not, this might be a temporary top.
DIA is lagging, but not far behind....
SPY
IWM
DIA
There is no end to this upward move! Where are the support points now. Let's look at the chart:
The strongest support level is actually around the 50% retracement point at 119 or so. Then there are 3 minor ones around the only small technical pullbacks of the last 6 months (unreal!). 2 of them are around the 126 level which is one of the Fibonacci levels as well so that would be the first logical stop for a correction.
Where does the market stand today? Below is chart of SPY for the last 6 months with some of my favorite technical indicators.
Most of the indicators are pointing to a strong uptrend with a slight downside pressure that would need to be confirmed in the coming days to justify calling an end to the trend.
