The S&P 500 Index finally closed above its previous high in 2007. It’s early and only time will tell, however, we are at another critical stage. My bias is bullish, however, my strategy and decisions are based on price action as I don’t trust my bias. You shouldn’t trust my bias either … or anyone’s for that matter.
S&P 500 Index (SPX) – monthly chart
Looking from another perspective, the S&P 500 Index (SPX) monthly chart shows the potential of a triple top which is bearish. I don’t make trade decisions based on price “patterns” but it’s good to be aware of the big ones. And this is a big one.
We’re looking for significant weekly closes above previous highs to validate the continuation of the bullish trend. If this happens it probably won’t trigger a buy signal but just confirm the trend, yet it is something for us to be aware of.
S&P 500 Index (SPX) – daily chart
No matter what, we always need to be aware of our risk levels. Looking now at the daily chart, our next risk level is below $1475.
S&P 500 Index (SPX) – weekly chart
Switching back to the weekly chart, our primary level of support—and the primary risk level to watch—is the upward sloping trend line. This is still a very critical area, even though it’s a bit deep, or far, from current price. Remember, the longer your time horizon the more risk you can be willing to withstand.
Let’s move on to some other ETFs …
iShares China Large-Cap (FXI) – weekly chart
As discussed in the last update, FXI is trading into the lower trend line. You can also see the wedge formation with the upper and lower trend lines. We’re looking for a bounce off the lower trend line prior to entry and ultimately a break above the upper trend line.
PowerShares QQQ Trust (QQQ) – weekly chart
A buy signal for QQQ was generated on March 13, 2013. QQQ has been range bound for the past couple of weeks. Risk levels are still below the lower trend line.
iShares MSCI Emerging Markets (EEM) – weekly chart
We are still looking for a bounce off of the lower trend line before buying … it’s getting close.
SPDR Gold Shares (GLD) – weekly chart
No change from last time. We’re still waiting for a bounce off the $148.50 area. GLD closed yesterday down $1.24 at $150.73.
SPDR Select Sector–Energy (XLE) – weekly chart
As discussed, we’re still seeing if XLE will trade into the lower trend line or the 200-week moving average and get a good bounce.
iShares US Real Estate (IYR) – weekly chart
Again, we’re waiting for price to trade closer to support, where we would hope to get a bounce off the lower trend line. The 200-week moving average is lining up nicely with the lower trend line, which could act as double support.
iShares MSCI Japan (EWJ) – weekly chart
EWJ is still quite far from a good entry point.
iShares Russell 2000 (IWM) – weekly chart
If IWM trades down into the $85.35 area and bounces off of the trend line this could be a good entry. IWM closed yesterday down $1.81 at $91.13
iShares MSCI EAFE (EFA) – weekly chart
Looking for price to trade into the area where the two trend lines converge. There is also good moving average support in this area also.
SPDR Dow Jones Industrial Average (DIA) – weekly chart
Potential trade set up with a bounce off the lower trend line. The risk below that is the 200-week moving average.
SPDR Select Sector–Financial (XLF) – weekly chart
XLF eclipsed the previous high made in early 2011. Still looking for a bounce off the trend line.
SPDR Select Sector–Industrial (XLI) – weekly chart
Here we are seeing if we get a bounce around the $39.00 area, which might coincide with the lower trend line. XLI closed yesterday down about 1% at $40.87.
SPDR S&P Oil & Gas Exploration & Production (XOP) – weekly chart
For XOP we’re looking for a bounce off the 200-week moving average and the lower trend line, which are matching up nicely for double support.
As always, keep your eye on price action and ignore your bias. Ignore my bias. Ignore everyone else’s bias. Know your risk tolerance and stick to it.