Frank Kollar: Overbought Rally At Critical Juncture
- Technical Market Commentary -
September 17, 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 it’s tracking ETF the S&P Deposit Receipts (AMEX: SPY) have moved higher for some three weeks now, but they have reached levels that could slow, or stop, the rally. Since June there have been three attempts by SPX and SPY to break-out of the correction declines and start an advance. The first two failed at the SPX 1120 and SPY 112 levels.
On Thursday, September 16, SPX pulled-back a fraction, but remains within just a few points of Monday’s closing level. Four days of little gain and, importantly, the volume for the entire three week rally was some of the lowest for this entire year.
The early August highs are the right shoulder of a bearish head-and-shoulders pattern. So that previous high, at SPX 1127.29, becomes very important. A close that is decisively above that level would put the head-and-shoulders pattern in doubt. It would also be the highest close for SPX since early May.
If we that close above SPX 1127.29, we would expect a continuation of the rally. If SPX pulls-back we could see, at the least, a normal retracement of the three week advance.
(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.)
Disclosure: Frank Kollar’s Fibtimer.com Stock Timing Strategy holds a position in the S&P 500 SPDRs.
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