$SPY spiking higher on four factors in my opinion.
1 – There is now a 90 percent chance of Greece leaving the euro zone over the next 12 to 18 months, according to Willem Buiter, chief economist at Citi.
2- European Central Bank President Mario Draghi pledged on Thursday to do whatever was necessary to protect the euro zone from collapse, sending markets and the euro higher Thursday afternoon.
3- Jobless Claims Unexpectedly Fall, Down by 35,000 to 353,000; Durable Good Orders Top Estimates, Up 1.6% in June
4- This is the one that really matters, all the above information is to keep the general public in the loop. The $NYMO (McClellan Oscillator) is currently showing a positive indication very similar to another instance. The instance that I want to illustrate happened on 6/4/12, when we had a couple of days of hard selling, and a turn around. The only difference between June 4th and July 25th is that on June 4th we touched the 200ma level in the $SPY and bounced. Yesterday we touched the 50ma and bounced.
My current interpretation is that as we approach August, we will most likely be able to start to bounce instead of dropping further. I believe that every drop will now be followed by people buying the dips. So we are prone to move higher. All this pretty much resumes the last paragraph on my Fuinhaz $SPY read for July 25, 2012 where I wrote :
“The most important message I want to pass along, is that we are still under the neutral level of the $NYMO (McClellan Oscillator) and the $SPY is showing that clearly. If we have another bad data, or bad news from Europe, we will go again under the 50ma, and then all hell will break loose.”
We did hold the 50MA, now bulls just need to step in and take control again. I am not trying to call the bottom in any way, I am just sharing my view of the market as I see them on my charts. Keep in mind that even if the bulls step in, the general idea will still be of negativity. But by the time people see the light, it will already be too late, and then we sell again. And when I say we sell again, I mean in May 2013.
Now let’s go for the numbers:
$SPY 1st support is 134.89, 2nd support 133.83 (20MA), and 3rd is 132.67 (almost 1 full point from the 50MA level @ 133.47).
$SPY 1st target is 136.21 (just above 100MA), 2nd is 136.69, 3rd is 137.06, and 4th one just for fun is 137.64.
Trade what you see not what you think.
