SPY Charts 5/30 A Rolling Market Gathers No Moss

The laws of physics apply very well to the market.  If something goes up it must come down.  If you roll something down a hill it gathers momentum.  We are gathering some momentum.  Since the beginning of May the market has fallen into the pattern of last year where the majority of stocks are trading lower, and historically May is a bad month for stocks anyway (Sell in May and Go Away). 

The momentum, or the fuel to the fire if you will, is the Euro problems in Spain and Greece.

Spain's banking system is on the brink of collapse and the ECB, who just a few months ago, said that they would not participate in sovereign debt auctions are starting to hint that they may need to in order to prevent Spain's financial system from collapsing.  In the meantime Spanish yields have spiked to, point of no return territory, the ended up around 6.7% by the end of the day.  With the cost of repaying their obligations so high and their banks under capitalized they are truly in a world of hurt, this will continue to have ripple effects on the market.












Italy also saw its borrowing cost rise today which begins to bring another elephant on the to the balance scale and with Greek elections in the next two weeks, which really looks like a coin flip at this point, the markets are going to carry that burden and I believe we are going to start to see downward momentum pick up at the end of the week and into next week.

The SPY Chart is shaping up for a big move to the downside.  I thought yesterdays price action was pretty interesting mainly because of how big the price action and the size of the tails in the middle of the day on yesterdays candlestick.  That told me that the bears are gaining some momentum after a slight move up since last week.



With employment numbers coming out on Thursday and Friday and those look to be shaping up not to be great and if they really dissapoint its going to see the market move with significant force to the down side and if Europe news adds to that it could be real interesting.  I can see the SPY Chart testing $130 this week and if we stay the course we could break $130 next week.

If you are not in bearish trades it would be a good idea to to look at some opportunities because puts in this market and on stocks, are going to be going with the flow the next week or so.

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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