Since our bottom in 2009 the SPY is up 96% and in the midst of that run we have had 2 major corrections of 16%+. With the 2010's flash crash and the 2011 US Debt and Greece drama. What is interesting about each correction is they are pulling back to there breakout areas. When we broke out of the bottom in 2009 the break out level was at $95. When the flash crash happened we tested close to $100 and never got close to testing support/break out level in 2009 and we continued to climb higher.
Then in 2011 when we had the US debt troubles where did we test? Pretty close to the breakout levels of 2010. So far in this bull market we continue to turn ceilings into floors and then we move higher. Right now we are at a critical juncture in the market. My feeling is that we could see a repeat of last summer, all of the news coming out is similar to last years. Many of secondary indicators are signaling warnings just like the canary in the coal mine.
As for the next few weeks I believe if we get unexpected good data from the US regarding jobs and some other key economic indicators we could see a substantial bounce, but that will most likely will give way to the European concerns. IF the conditions in Europe are not addressed in a drastic way selling pressure will continue to mount and with out some unexpected good news in the EU we could eventually crack support at $134 and I could easily see a drop down into $128 $129.
Remember as you trade follow your rules enter into trades with appropriate risk and cut losers loose if the go against you.
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| SPY Chart Daily May 10th |
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Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives
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