Diary of a Financier

Intraday update: SPY reversal tries to sustain throwover top

In Capital Markets on Thu 12 Dec 2013 at 15:22

The S&P 500 ETF ($SPY) is still off, testing that resistance-cum-support I highlighted last week.  Today, SPY bounced impressively off of that level, so I wanted to update the charts…

Technically, not much has really changed week-over-week.  SPY remains in a throwover top above its dual short and long term rising wedges.  Trendline support >$178 is now the key level.  Yet again, the daily fractal shows unanimous bear divergences in its indicators:

SPY daily/weekly

SPY daily/weekly

The shorter-term fractals show a multiday consolidation channel that recovered from a breakdown intraday–a classic bear trap.  ST bull divergence in the 15-minute chart was a clue that a reversal might be underway.  Further, the 1min shows a classic Head & Shoulders bottom that marked the low.  While SPY should work down from $178.7 at present to $178.1 right shoulder support by the close, look for a breakout tomorrow over that $178.8 neckline resistance to start a recovery up to $179.5 first resistance, $180.5 second:

SPY 15min (1min inset)

SPY 15min (1min inset)

We’re maintaining our portfolio until we see SPY’s reaction at this critical juncture.  A sustained breakdown beneath that $178 intersection of the 15min consolidation channel’s support and daily rising wedge resistance-cum-support trendline would open an airpocket down to ~$171.

Later tonight, I hope to post some charts of names we’re looking to rotate in and out of…

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