SPY Watch

What a difference a day makes. The exchange-traded fund that tracks the S&P 500, SPY, has whipsawed back into bull phase on Person's Proprietary Signal (pps), one day after turning bearish.

SPY is a sidewinder. It hasn't gone anyplace since May. On Thursday I wrote, "[S]idewinders can make good plays. This one is more than 10% wide, so there's money to be made for traders who can call the turns."

Today's signal shows that calling the turns, for SPY or any other issue, is no easy matter.

	trend	sto	sto zone	pps	psar	macd	macd trend	ma20	ma200
SPY $114.37

The fast stochastic also moved back into bull phase, and the macd began to rise again.

I won't repeat the technical analysis of this etf. It is in Thursday's posting.

I'll simply say that sidewinders like SPY are more prone to whipsaws than are directional plays, especially as they near the limits of their sideways range. SPY is near the top of it's range now.

For a chart like this, I tend to pay more attention to the price levels than to the signals themselves.

A multi-day break below the range, or a piercing of support, or a move below a significant moving average, such as the 20-day: These might trigger a trade in my accounts.

But in the face of the current range-bound whippiness, I would tend to keep my money on the sidelines.

Also, some trivia:

In terms of Fibonacci retracements, the current stall is at the 50% retracement of the decline from $157.52 in Oct. 2007 to the bottom of $67.10 in March 2009, and the trading range is between the 50% and 38.2% retracement levels.

So a significant break above either level would suggest the chart was moving from range-bound to directional.

Disclaimer

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.


No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

Abbreviations:

• pps - Person's Proprietary Signal.
• psar - Parabolic Stop and Reverse
• ma20 - 20-day moving average
• ma200 - 200-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways.
• sto: green for bull, red for bear.
• sto zone: green for overbought (80+), red for oversold (20-), yellow for neutral zone
• psar, pps, macd: green for bull mode, red for bear.
• macd trend: green for rising, yellow for sideways, red for falling.
neutral.
• ma20, ma200: green for above the average by more than 1%, red for below the average by more than 1%, yellow for within 1% either side of the average.