The weekly chart of SPY, the ETF for the S&P 500 index, shows the steady grind higher from the February and March lows.
It’s interesting to note the “elevator” down weeks of early this year and the “escalator” up weeks since. That’s usually how it works. When it’s going down it goes down fast and when it goes up it’s usually a slow slog.
I like the price action. The last few weeks has shown a test of lower prices but not enough fire power to sustain any meaningful sell off. The slow grind up is good too. Steady upward pressure is easier for the market to digest. It takes time for people to get used to higher prices.
As we approach the all time high from earlier this year we should see an increase in volume and volatility. This is the only price point that everyone is watching. It’s like a never ending Netflix series with the same characters and a new plot line every week.
This weeks plot line is about to get good. I can’t imagine not at least tagging 286 on SPY. 286.63 is the all time high. Anything could happen though. It is the only line in the sand right now so it’s really important.
The good news is that the technology sector, XLK, which has been leading the broader S&P 500 index higher has already surpassed its high from earlier this year and is grinding higher nicely. The other sector ETF’s are a mix of also rans (XLI, XLB, XLF, XLE), recently drafted (XLU, XLP, XLV) and the other rock star besides tech, XLY. I don’t see any horrible price action in any sector. Some will likely head lower before heading higher but that is just normal rotation.
Sector ETF’s mentioned…
XLI-industrials
XLB-materials
XLF-financials
XLE-energy
XLU-utilities
XLP-consumer staples
XLV-health care
XLK-technology
XLY-consumer discretionary
I see no reason SPY can’t take out the old high soon. Bonds have been trading sideways for four years albeit with a couple of big spikes and sideways is probably a plus for stocks considering multi year support was broken earlier this year. See weekly chart of TLT.
iShares 20+ Year Treasury Bond Fund (TLT) weekly
There are two things I don’t like right now;
- SPY is way above its mean and mean reversion can get ugly quick. But alas, price can live this way for years on end. Think broke permabears. How do these guys survive shorting a stock market that goes up year after year? Can’t these idiots draw a stupid trend line? Really, how hard is that… it’s not.
- We are 50 basis points away from the all time high from which the market tanked earlier this year. This is where the nasty sellers live; its a dark, musky, smelly tunnel filled with spider webs spun by the creepiest of creepy crawlies with little dark eyes that flicker with your every move. We must get through this level at some point but this is as good a time as any for the creepy crawlies to take her down.
We will see…soon.
SPDR’s S&P 500 Trust Series ETF (SPY) weekly
I think it’s wise not to initiate any more exposure until we have cleared and closed above 286.63 SPY without failing.
So, kick your shoes off, sit back and watch the show with me. Pass the popcorn,
Don
PS. How do people trade or invest without charts? Now that would scare the hell out of me; like playing darts in the dark. Ouch!