6/30/2012 SPY #12

S&P 500 Cash Equity (SPY)

(Daily)

-          Like I said in the last post, the SPY made a new high outside of the range and then retreated back into the range. Now that the SPY is back above the range, the stock will most likely continue higher. I'm using the upward sloping channel as a reference and expecting the SPY to form another higher high nearer the top of the channel before any pullback happens.

-          On the upside, SPY should encounter the 1^st resistance level @ $136.91 and 2^nd resistance level @ $139.21. Judging from the current move, I doubt the stock can reach the 2^nd resistance level next week, a pullback should come in the next few days.

-          Because this is the 2^nd time the SPY broke out of the range, I'm expecting heavier supporting strength as the stock pullback to the range top level @ $134.22. Noticing the 50 day moving average (50 SMA, grey in color) is also sitting at the same level, this should provide the SPY another source of support.   

-          Nevertheless, the SPY gapped up on Friday and pushed higher. If anytime in next week the SPY breaks below the 2^nd gap level @ $134.86, be careful of a quick gap fill @ $132.99. I don’t suggest any long position into the gap. Flatten all the long position if SPY breaks the $134.86 level; wait for the stock to come down to the bottom of the uptrend channel or some sign of reversal before going in long again.

(Hourly)

-          Keep in mind that July 4^th is a national holiday therefore the volume is going to be low in the upcoming week. I don’t think there will be any major move after Wednesday unless a major news breakout. The SPY will probably chop sideway and do nothing after Wednesday because a lot of people are taking a long weekend off.

-          I add another minor resistance level @ $136.25, which is the previous week high. Given the strong move on last Friday, I think the SPY will most likely move higher on Monday but the up move is going to be slower in pace because of low volume and diminish in buying.

-          If the SPY retreats back into the range @ $129.93 - $134.22 next week, there is a support level @ $131.25 that comes from multiple bottoms of the past 3 weeks.

I hope this post offers you some insight, thank you for reading and please feel free to give me some feedback.