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S&P Chart Indicates a Bottom May Be In Place

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June 27, 2011 – Comments (1) | RELATED TICKERS: SPY

There are two very eerily similar candle patterns that shows that the last five days of trading the last five days of trading, from 6/21 through 6/27, is nearly identical to the sell-off, bottom, and subsequent rally that was formed from 3/11 through 3/17.

I came very close to selling my calls in SPY (July 129) today, but after noticing the pattern, I thought that there was a strong enough correlation there to hold my calls for another day. Yes, I do run the risk of the market selling off tomorrow in similar fashion to what we saw on Friday, after a descent gain, but unlike last week, we also created a bullish piercing pattern with today's rally. 

So I'm banking on more upside in addition to the rally that we saw today, and in the process, I think we'll see the bears run for the exits. 

Here's the S&P Chart Comparison.

1 Comments – Post Your Own

#1) On June 27, 2011 at 5:57 PM, davejh23 (< 20) wrote:

The candle pattern looks similar, but the mid-March comparison doesn't work for me...there are many differences between the daily charts.  I'd say the weekly S&P chart looks close to a turning point right now, but weakness through the rest of the week could change that...it's not very useful to look at weekly charts on Monday.

Looking at short term charts, we don't look oversold.  Today probably would have been a good time to sell the calls.  I wouldn't be suprised to see SPY top $129 or even $130 this week (those calls could jump 50-100%), but I'd bet on the downtrend holding and SPY being below $126 by July options expiration.

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