SPY 3 Month Chart – June 4, 2009 Pre-market

I charted the S&P 500 Index ETF, SPY, before the markets opened on June 4, 2009, after it closed at 93.65 on the 3rd.

• SPY found support yesterday just above its 200 day moving average
• SPY is still in the middle of widening trading channel that started two and a half months ago
• Volume remains weak
• Williams %R still shows overbought, but is fading – that can last for a while still though
• The SPY 10 day moving average is still leading the 20 day moving average by a hair, that’s bullish

Opinion – SPY has closed three days above its 200 day moving average which is big to me.  I didn’t expect it to break through and find support, but it did.  Once it broke through the expected retest of the line was expected.  Now that we’ve seen that today will be telling.  If SPY can hold above this moving average this rally could still have legs.  That will also help the 10 and 20 day averages move above the 200 day which is a bullish indicator on its own.  Based on the trading channel I drew SPY has room to bump around to either side without breaking support or resistance.  The key points to watch are the 200 day moving average, then the 10 and 20 followed by the lower trend line of higher lows.  The upside potential is extremely hard to predict with so much of the rally already behind us.  I’ m not buying in yet, but I might regret it.