Mixed Signals for S&P 500 Index (SPX) Says Market Timer Frank Kollar
July 9, 2010 (FinancialWire) (By Frank Kollar)
Both the S&P 500 Index (SPX) and its tracking ETF
the S&P Deposit Receipts (NYSE: SPY) remain well below
critical levels even after this week’s two-day rally.
After Wednesday’s July 7 sharp rally, many analysts
have noted that the head and shoulders pattern that has
formed in the SPX and SPY has possibly been negated as
the neck of the right shoulder was surpassed.
This is the case but this pattern, as old and venerated
as it is in technical trading, is still only one indicator.
Decisions made on the actions of a single indicator are
very risky.
Both the SPX and SPY are below their 50-day moving average
and 200-day moving average. The 50-day average has now
crossed below the 200-day average. This is bearish market
action.
The rally this week could be the start of something, but
it started right at the very oversold lows and after two
weeks of non-stop selling. It has the earmarks of short-covering.
Last week we wrote; “Anyone buying the S&P 500
Index since early February 1998 is underwater. That is
twelve years after which the SPX is lower than when that
hypothetical investor bought into the stock market.”
Between last week and this week have any of the stock
market’s concerns been solved?
Of course the stock market will do what it always does,
and that is its own thing. But we would be hesitant to
jump into a rally of such short duration and with so many
other bearish indicators intact.
The Fibtimer.com (http://www.fibtimer.com)
ETF Timing Strategy has a position in the S&P 500 SPDRs.
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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