SPY Charts 6/18 Markets are Still Worried

The Greece election happened over the weekend and...  the new government will continue to support the austerity agreements that they promised in the spring and last fall, but where's the rally? This news was supposed to but the market at ease and send most of the indexes higher, but we're not seeing that reaction.  Instead we are getting a "so what" reaction.  To me this is a bearish indication that the market is not yet ready to take things higher.  There is still a lot of uncertainty that the market needs to resolve in order to move higher.  We will continue to see rally's on rumor and selloff's or no reaction on good news.  That is what happened today.

The obstacle this week for the bears is if the Fed decides to extend operation twist. The market could react warmly to the news, but if it is the same reaction that we saw from the bank bailouts in Spain and the Greek election that would then solidify the bearish mood the market is in.

The big warning sign is Spanish and Italian yields are continuing to rise.  With Spain;'s yields over 7% this is the point at which Spain will have trouble repaying its obligations.  That is going to be what the market is going to key on this week and how that gets addressed should tell us the market direction by weeks end.

The SPY is at a very critical resistance level at $135  Early last year we oscillated between $126.50 and $135 and it seems we could be on that path again.  If we continue to trade sideways and not be able to break $135 we will most likely trade down to $126.50 in the month of July.




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Disclaimer: This article is intended to be informative and does not constitute a buy, hold, or sell recommendation., and should not be construed as personalized advice as it does not take into account your specific situation or objectives