Momentum Rally for SPX and SPY Says Market Timer Frank Kollar

October 16, 2009 (FinancialWire) (By Frank Kollar)

Both the S&P 500 Index (SPX), and its tracking ETF the S&P Deposit Receipts (NYSE: SPY) have advanced to new 2009 and new rally highs.

After correcting to their 50-day moving average two weeks ago, both the SPX and SPY reversed hard on Oct 2 and have been rallying since. Several days have seen gaps at the open as the advance has taken on the trappings of a momentum rally.

For the SPY, the widely traded ETF that follows the S&P 500 Index, the critical 50% retracement for the entire bear market decline is only 2.5% higher, at SPY 112.31.

Typically, momentum rallies have bad endings, but until they do, no one knows just how high they will go.

There are many technicians calling for a reversal and correction at that 50% level. That could certainly be the case but until it happens, the trend remains up. The SPY could blow right through the 50% retracement level.

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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