Market Pullback Looms Says Market Timer Frank Kollar
July 31, 2009 (FinancialWire) (By Frank Kollar)
The S&P 500 SPYDRS (NYSE: SPY) and S&P 500 Index (SPX) have both reached resistance levels that may stop the stock market rally, at least for awhile.
After a gap higher open on Thursday, July 30, the S&P 500 SPYDRS (NYSE: SPY) reached its 50% retracement resistance level, at $98.80, for the August 11, 2008 to March 6, 2009 decline. After intra-day highs at $99.83, SPY fell back to close at $98.69.
The S&P 500 Index (SPX) also traded well above its 50% retracement resistance level, at 987.47, for the August 11, 2008 to March 6, 2009 decline. The index then fell back before the close and finally ended the day at 986.75.
The 50% retracement level is strong resistance and the market reacted to it midday by selling off into the close. Those round numbers at 1000 for the SPX and 100 for the SPY are also tough, at least initially, to surpass.
Look for a correction in the range of 5% to 6% in coming days.
On the flip side, a decisive close above this level would likely propel these shares to the 61.8% retracement resistance level all the way up at SPX 1064 and SPY 106.
The http://www.fibtimer.com ETF Strategy has a position in the S&P 500 SPYDRS.
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.
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.
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