Treasury long bond (TLT) prices pulled back from their low but remained below yesterday's open. High-yield corporate bonds (JNK) rose to the mid-range of yesterday's decline.
The move in stocks positioned SPY near a short-sell point for swing traders looking to profit from the 3- or 4-day trend reversals. The move comes on the fourth day since the cycle low, $104.58, on Feb. 5, a point that also serve as support for the shares.
A significant pullback before the close today, as I see it, would indicate a bear entry point, either by selling shares short or buying puts. (Traders who hedge could sell a bear call vertical spread.)
Lacking a pullback, I would expect the uptrend to continue in early trading on Friday.
In any case, given my with-the-trend bias, I would want to see the price hook downward before I enter on the bear side. Upside resistance is at $109.03, the start of a 2.4% one-day decline on Feb. 4. Above that stands resistance at the previous cycle high of $110.59. SPY has averaged a 2-point daily move over the last two weeks, putting the $110 and $106 levels easily within reach on Friday. Looking more broadly, SPY remains in a downtrend that began on Jan. 19. The macd is bearish, although trending up toward the zero-line, a sign of possible bullishness to come. | The Taylor Trading Technique  A 1950 classic on trading short-term swings lasting three to five days. Deserves a place in the library of all active traders. |
To the scans. Here's what's notable in high-volume . . .
. . . exchange-traded funds:
- FXI, which tracks the UK stock exchange's FTSE index, and EWZ, which tracks Brazilian shares, are showing a strong macd bull signals and a price rises. Both moves are counter-trend to declines that began last autumn.
- XLB, tracking building trades, rose 2.4% increase low to high with a macd still in bear territory but very close to the zero-line. The move, however, isn't a breakout. It moves the price up to the area of a high set on Tuesday.
- SMH, semi-conductors, up 3.3% with a macd bull signal. The move puts the price in slight congestion around the $25.90 level set at the beginning of the month. If that is cleared, then the next resistance is around $27.50 and then $80.70. The broad trend is ambiguous, but my best estimate is that it's leg up in an uptrend that began in November.
- USO, crude oil, is showing a slight macd bull signal on the fourth day of an upward march that has carried the price 8.8%. Thee's resistance just below $38 and after that at $41. Prices have been trending sideways between around $42 and $33 since July.
- XRT, retail, macd bull signal on a strong price increase to $35.39 that puts it at the top of near-term resistance. Next resistance is at $36, and then $36.50. So there's an awfully lot of sticking points between here and glory for this stock, which has been trading sideways since last autumn.
- XHB, homebuilders, bull signal, strong price rise to $15.76. There's resistance between $16 and $16.36. Larger trend is sideways.
- PBR shows a macd bull signal backed by a higher open that then proceeded to fall back into yesterday's trading range. A count-trend play.
- CAT, up 6.8% to $56.20, a point of slight resistance. Further upside resistance at around $58 and $62. This can be interpreted as the start of a new leg up in an uptrend following retracement.
- SBUX and AMZN are both showing a macd bull signal just barely peeking over the zero-line, like a "Kilroy" graffitum.
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Topics:
S&P 500, SPDR, Spiders, Treasury bonds, high-yield corporate junk bonds, Electronic Arts games, oil, petroleum, London FTSE stock exchange index, building trades, semiconductors, retailers, home builders, Petroleo Brasileiro Brazil petroleum oil drilling, Caterpillar construction machinery.
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