Market Review Why This Market Could Take Off

Lets be honest the last 2 weeks have been very uneventful for traders.  No action equals very little trading.  The best things to do in these lulls is to be patient.  We do know that there have been some positive economic numbers the last few weeks and the Fed if necessary is ready to employ QE3.  The SPY is right at resistance at $141 and has not mounted a good challenge to it yet.

So why do I think the market could take off despite it trading at resistance.  The SPY ETF since 2010 has been in a very predictable channel as you look at it on a weekly chart.  It slightly jumped out of the top of its channel in 2010 pulled back and formed the base of our lower channel and since then that support channel has held up well. The pullback last summer retested and bounced off that support and now the SPY is close to the top of the channel again, but as you may be able to see there is some daylight where the price is now and the top of the channel.  I believe that the SPY is going to pause at $141 pullback to the October trendline and then move up to $145 by the end of the year.  Also the weekly MACD has crossed and is issuing a buy signal, and this is bullish sign for the SPY.

Most traders will be back in the next few weeks and we should see the volume come back up and the price action should increase as we get into the beginning of September.





Get more in depth trade ideas and trading charts FREE 3 WEEK  trial to SMART TRADE NEWSLETTER Our professional traders share their experience and ideas. Learn more.   

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