SPY Chart – April 24, 2009 – Premarket

SPY is a large ETF that attempts to mimic the daily price changes in the S&P 500.  I charted the daily prices for SPY over last three months premarket on Friday, April 24, 2009 after it closed at $85.37 on Thursday.

• Line A shows previous levels of both support and resistance and could be another line of support if SPY comes back down
• Line B is the trend line of higher lows marking a tough line to break above – This is the top side of SPY’s trading channel
• Line C is the  trend line of higher lows that started with an intraday high in early March – This is the bottom side of SPY’s trading channel
• Line D was the trend line of higher lows, but broke lower on Monday and now could act as resistance
• SPY is caught between its 10 day and 20 day moving averages, but futures this morning show that it should move above the 10 day
• The Williams %R indicator for the 14 day period broke below overbought this week which is bearish, but is showing signs of life now
• The Williams %R indicator for the 28 day period is still in overbought where it remains neutral until it breaks below the gray overbought area

Opinion = With the 20 day moving average offering good support on the lower side and the likely break back above the 10 day moving average likely coming today, SPY could have another few days of upward movement.  Lines B and D are the potential resistance areas.  I’m only looking for a few days to the upside and then I think the path of least resistance will be lower, possibly down to the 50 day moving average closer to $80.00, but I won’t become bearish until line C breaks and both the 14 and 28 day Williams %R fall – I expect both of those to happen at about the same time.