S&P 500 SPDRs (AMEX: SPY) Trade Below Critical Support Says Market Timer Frank Kollar
January 23, 2008 (FinancialWire) (By Frank Kollar)
Shares of the S&P 500 SPDRs (AMEX: SPY) have declined steadily since Fed Chief Bernanke last spoke in mid-December. Now he has attempted to repair the damage.
After world markets suffered major declines on Monday January 22, a holiday for U.S. markets, the markets were poised for 4 to 5 percent losses at the open on Tuesday. But the Fed announced a three-quarter percent rate cut before the open and the potential (mini) crash did not occur.
Bernanke may have saved the day, but the jury is still out for the future. The SPDRs dove below $129.91 shortly after the open on Tuesday, which is the Fib 78.6% retracement level. They did not stay there and by the close, the SPDRs had recovered and were just a fraction above this support.
It is important to note, this is a critical support level for the SPDRs and is based on the entire advance since the July 2006 lows. If this level is surpassed over coming weeks, we will be looking for a test of those 2006 lows at about SPY 122.00.
The selling may have ended for Tuesday, but beware the coming weeks as investors try to decide if the bottom is in, or if further declines still lie ahead.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy has a position in the S&P 500 SPDRs.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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