$SPY – anticipating new highs

Following the green…

SPY, the ETF for S&P 500 index,  after being trapped in a box (see chart below) for 37 trading days, nearly four weeks of frustrating sideways chop, has a good chance it will resolve itself to the upside and into new high ground tomorrow.

And take the entire stock market with it.

The trouble is as it comes to the top of the box again, 45 of the stocks on my nifty-fifty stock list are on buys.  That’s a lot, so much that the last two times (8/15 and 8/23) there were 40 or more, the market took a sharp drop the next trading day.

The difference this time is market breadth has turned up after 27 days of decline.  It is as if the bears, having tried but failed to take the market down, have run out of time.

Note the follow through on SPY each time breadth turned up in the immediate past (the green lines on the chart).  If the market follows the green again this time there is no where else to go but to new highs.

But since anticipation is only anticipation, needless to say, one has to be nimble at this juncture either way, and protective stops are a must, long or short.

(right click on the chart for a larger view)

spy_green_2016-08-10_0615

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