SPY - A Long Term Perspective for investors and trades
This is a very important level for the market as the Long Term Short that has been in play since March 2012 is at the failure point. Not coincidentally this is of course occurring on a Friday afternoon, when many market participants would prefer to be taking off for the weekend.
As we have been stating since March 2009, we see no viable outcome for the market other than a long term "recovery", meaning in this instance that the market must break new highs in order to prevent a complete meltdown of the "economy". We correctly have been stating since August of 2011 during the retrace that we expected a new intermediate high in 2012 and that is what has occurred in the last few days.
Normal market activity would be a price above the top of the Short entry range, a pullback, and then a resumption of the upward trend before an all-time high is reached. Any negative or positive news from FED of ECB will of course have an outsize effect on price action from this point forward. As would other fundamental factors not now known.
If the LT Swing Short is definitively broken, frenzied short covering could propel this market to the identified 2nd target area very quickly, perhaps in as little as 2 days. Conversely a prolonged struggle over this area could result from a lack of sufficient bullish catalyst if determined short sellers reenter at this price level.
We reiterate that at this point we see nothing from a technical standpoint to preclude a new all-time high, possibly before March 2013. Don't underestimate the election cycle effect, for good or bad.
As always, all personal views aside, we trade what we see on the chart, not what we wish. Charts don't lie.
Trade safe.
As we have been stating since March 2009, we see no viable outcome for the market other than a long term "recovery", meaning in this instance that the market must break new highs in order to prevent a complete meltdown of the "economy". We correctly have been stating since August of 2011 during the retrace that we expected a new intermediate high in 2012 and that is what has occurred in the last few days.
Normal market activity would be a price above the top of the Short entry range, a pullback, and then a resumption of the upward trend before an all-time high is reached. Any negative or positive news from FED of ECB will of course have an outsize effect on price action from this point forward. As would other fundamental factors not now known.
If the LT Swing Short is definitively broken, frenzied short covering could propel this market to the identified 2nd target area very quickly, perhaps in as little as 2 days. Conversely a prolonged struggle over this area could result from a lack of sufficient bullish catalyst if determined short sellers reenter at this price level.
We reiterate that at this point we see nothing from a technical standpoint to preclude a new all-time high, possibly before March 2013. Don't underestimate the election cycle effect, for good or bad.
As always, all personal views aside, we trade what we see on the chart, not what we wish. Charts don't lie.
Trade safe.