SPY Charts 6/4 Break In The Action

After a rough Friday today's markets were in the same mood, just a little less.  Most of the price action today is follow through from Friday.  It looked as though we had picked up some steam midday and the SPY was off 1%, but the market overall finished pretty even and slightly down.  But with the close below our previous close that still sets a bearish tone for the week.

Factors that could contribute to see the market drop this week?

US Economic Data - Factory orders declined on Monday, and with other economic releases, (GDP, durable goods orders, ISM manufacturing, ADP, initial claims, pending home sales and Unemployment Report weaker than expected) shows that the U.S. economic environment is hitting a soft patch.  If jobs data continues to be weak at the end of the week selling will continue.

Europe - Europe has been the catalyst for much of the drop in the SPY and the overall market.  Because of the political uncertainty in Greece and Italy, along with the banking crisis in Spain and the overall lack of direction for the Eurozone.  Any piece of bad news will move the market down. 

China Slowing  - There was a report over the weekend that China's service sector was slowing.  That is just another small stick that is adding to the weight of the health of the world economy.  If China is slowing it means that Europe will really be in some trouble.

Things that might stop the decline this week.

Beige Book/Fed Talk - The market is looking for any shred of hope from the Fed that it may enact QE3  but things are not bad enough, yet, that Ben would consider doing it.  But if the rumor mill gets cranked up and if the beige book hints about it, the market could see a relief rally.

Euro Action -  If in some way, shape, or form,  The Europeans get their act together and start talking seriously about solving the problem, and get some traction on Spain and some of their other issues the market could see a nice up tick.  Although based on their track record, I dont see that happening.

The SPY Chart broke from a flag pattern last week I still see that pattern continuing this week, as we get to the end of the week we might see some capitulation and then another rally in play.  For now price action suggests until other wise reversed we should see the SPY continue to sell.




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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