Key Price Levels: April 23, 2009

At the end of last week, the S&P Depository Receipts (symbol: SPY) and i-Shares Russell 2000 Index (symbol: IWM) barely closed above the most immediate significant pivot point or resistance level. In general, this would be considered a bullish development, but let's keep things in context: this is still a bear market and the market is very over bought on an intermediate term basis.

Please review the methodology and the significance of the key price levels by clicking on this link.

A weekly cart of the S&P Depository Receipts (symbol: SPY) is shown in figure 1. Last week, the SPY closed at 87.08 or 30 cents higher than our key pivot level. Normally a bullish breakout, I would still expect the market to struggle at these levels for the reasons given in the article on sentiment. Support on the down side is at 82.61; the SPY made a low at 82.75 earlier in the week before bouncing. A weekly close below this level, then we will be visiting the lows at 70.87.

Figure 1. SPY/ weekly

A weekly chart of the Diamond Trusts (symbol: DIA) is shown in figure 2. The significant resistance at 82.64 remains significant resistance. If the markets roll over, expect the DIA to retest the low pivot at 67.93.

Figure 2. DIA/ weekly

Figure 3 is a weekly chart of the Power Shares QQQ Trust (symbol: QQQQ). It has been my expectation that the breakout above the 30.33 level would carry prices to the 40 week moving average. We could get there, but as time goes by the value of the average should be lower. Regardless, if the QQQQ rolls over, expect prior support levels at 30.33 to be tested.

Figure 3. QQQQ/ weekly

Figure 4 is a weekly chart of the i-Shares Russell 2000 Index (symbol: IWM). My previous comments on the IWM were: "The close above the pivot at 42.38 will likely propel prices to the 47.58 level, which is about 1 point away from the recent close. There is significant resistance in this region - a key pivot point and 2 positive divergence bars." This was correct. I also stated: "A weekly close above these levels would be significant and likely propel prices to the 40 week moving average." Last week, the IWM closed above the key pivot by 17 cents. Once again, context, context, context. Let's wait and see. On the downside, 42.38 should be support.

Figure 4. IWM/ weekly