I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Saturday, October 10, 2009

SPY S/R and Trendlines

While many of us focus on the SPX, as it is a better "measure" of how the market behaves, it is worthwhile to look at the SPY too. Because when investors want to "buy the SPX", the most efficient proxy is the SPY. The trendlines are always just a bit different on the SPY when compared to the SPX and the wave retraces are also just a little different.

First here is my trendline chart of the SPX. You will notice the line from the bottom to the first major dip. And the recent price action could almost be seen as a "backtest"

Now for the SPY chart. You can see that it recently already cleared the backtest. Which is an interesting bullish difference. On the other hand, an interesting bearish difference is that the money flow (as measured by the CMF) is much more negative for the SPY as compared to the SPX.

There is nothing definitive to be gleaned from comparing and contrasting these charts yet. But I wonder if we will find some more divergences when we get closer to the top.
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