Wednesday, June 9, 2010

Some Technical Signposts To Help Navigate An Increasingly Hostile Market (part 2)

In this article, I will utilize some daily charts to pinpoint buy and sell points on the ETF's that represent the major indices. These pivot points can be used as road signs to help navigate this hostile market environment.

Figure 1 is a daily chart of the S&P Depository Receipts (symbol: SPY). Key pivot points or areas of most intense buying (support) and selling (resistance) are identified with the black dots. If prices close above this recent pivot at 107.22, then there is a good possibility of higher prices. A stop loss can be placed at 106.04 as this would be the next key pivot formed. (Of note, this has not happened yet but in anticipation of higher prices and a close over 107.22, the next key pivot will be at 106.04, and this would become support.) A close below 106.04 is reason enough to move to the sidelines. For the record, the February low pivot comes in at 106.29, and the November, 2009 low pivot is at 104.05.

Figure 1. SPY/ daily

Figure 2 is a daily chart of the PowerShares QQQ Trust (symbol: QQQQ). The breakout last week above 45.70 was a failed signal and the key pivot at 44.32 is the new support/ resistance zone in play. 45.70 is the next level of resistance. A close above 44.32 is reason enough to get long. Although the next pivot has not formed yet, it does appear that it should be at 44.17. Therefore, a close below these levels would be reason enough to move to the sidelines.

Figure 2. QQQQ/ daily

Figure 3 is a daily chart of the i-Shares Russell 2000 Index (symbol: IWM). IWM is well below its 200 day moving average and the most recent key pivot or resistance level (at 63.91). A close above 63.91 would be the signal to go long IWM. The key pivot from the February lows comes in at 58.93.

Figure 3. IWM/ daily

Note: as I write this article (3 pm EST), none of the 3 ETF's are above their key pivots.


Luv them Waves said...

Q's below, SPY at the 'give up' point.

Change in tact - what are the downside targets (or reset on the upside?)

Guy M. Lerner said...

see yesterday's article -- weekly charts for give up points