- Technical Market Commentary -

June 18, 2010 (FinancialWire) (By Frank Kollar) (Go to http://www.financialwire.net/?s=cmmtry for all recent commentaries.) — Both the S&P 500 Index (SPX) and its tracking ETF the S&P Deposit Receipts (NYSE: SPY) are now in BUY territory and should reach higher highs in coming weeks.

The SPX has had four better than 9 to 1 up volume vs. down volume days on the NYSE. Such days are uncommon and are typically followed by a substantial advance. We look for two such days in a two month period. We have had four such days, the last occurring on Tuesday, June 14, in only four weeks.

The SPX and SPY are now above their 200-day moving averages. The average stopped the last advance back on June 3. This time we have held above it for three days.

Both the SPX and SPY have a well defined double bottom in place with lows occurring on May 25 and June 8. Those lows also stopped right at the correction lows of February 5. That creates a solid technical bottom for the stock market.

The SPX rallied through 1100 with ease. This round number might have slowed the rally down but did not.

On several days this week and especially on Thursday, June 17, the stock market had bad news. Thursday’s news was higher than expected new weekly unemployment filings. Yet stocks were able to reverse off midday lows and rally to a positive close.

The SPX will reach strong resistance at 1151 and the SPY at 115. This is the 61.8% retracement level for the April to May declines for each. This resistance, if surpassed, would likely result in a test of the April highs.

Disclosure: Frank Kollar’s Fibtimer.com Stock Timing Strategy holds a position in the S&P Deposit Receipts (NYSE: SPY).

(Go to http://www.financialwire.net/2010/04/22/about-kollar/ for more about Mr. Kollar, and go to http://www.financialwire.net/?s=kllrfby+cmmtry for more of Kollar’s commentaries.)

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