Diary of a Financier

SPY technical update: Weekend edition

In Capital Markets on Fri 21 Feb 2014 at 17:37

Rebounding hurriedly from a 7% drawdown to start the new year, $SPY closed the week @ $183.9, just near new alltime highs having shied away from overhead resistance…

SPY’s 15-minute shows a fulcrum top with 3x bear divergence (as echoed in the 30min), SPY 15min/daily/weekly (2013.02.21)suggesting it’ll start the week lower after brushing neckline resistance ~$184.8 atop the current right shoulder.  Given the massive momentum built-up from the January/February correction, these bearish short term technicals are signs of a mere regrouping before SPY heads higher.

That said, the daily chart has work to do before a real bull reversal is confirmed.  SPY’s daily shows it teetering above the vertex of a LT rising wedge, with an opportunity to shatter indicators’ bear divergence with a breakout reversal next week.  If that breakout fails to transpire in the next handful of trading days, SPY should undergo another notable turn lower.

The weekly fractal tells a similar story, with momentum (MACD) giving an early bull reversal signal ahead of a lagging MFI, which means this recovery hasn’t been on the back of much volume.

Again, the setup suggests SPY should suffer a momentary lapse before heading higher–a pause in its momentum that’ll allow some volume to catch-up and substantiate support behind an assault on $185.

Fundamental valuations and psychological indicators have sufficiently moderated, given the [newly regressed] low interest rate environment. These recalibrations are additional inputs that have me prepared for the market to resume its cyclical bull run here.


With buys in $EBAY, $TRLA, and $MRVL increasing our exposure (net of $PKX and $ARII sales), we’ve redeployed some of the cash we had raised in January, returning to slightly overweight from the underweight positioning we enjoyed at market lows.

The portfolio’s allocation is back up to 63/32/5 vs 60/40 benchmark (stocks/bonds/cash), with beta up at 0.86 vs 0.76 benchmark, and sigma 0.89 vs 0.51.


  1. […] that in mind, the trade activity I’ve been reporting since February has our allocation back up to slightly overweight risk, after we reduced to […]


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