As soon as the Greece fear subsided, many traders and investors rushed in to buy after many were on the sidelines. These worriers were fueled by the fear that Greece would set off a sell-off or systemic event. The majority of people wanting to sell were already out, and had to chase the move back up. Shorts covered, causing momentum in the stock market.
On Friday, 1/3 of all stocks advanced, while 2/3 declined.
The New York Stock Exchange saw 71 new highs but 189 new lows on Friday. We are lacking breadth.
The first 3 up days in $SPY last week were all on declining volume. Volume increased on the first down day.
Thursday and Friday’s $SPY gap and go to the upside, was on 33% lower than average volume.
MACD had a fast bullish crossover and went straight up last week. Bullish MACD.
The 60.53 RSI at long term resistance, gives enough room for a few more days run up before becoming overbought.
We are back at resistance at $212.75, a close above this level sets off the possibility of 2015 finally trending with higher highs and higher lows, and finishing with a decent return for the $SPY.
Beware of the 70 RSI acting as a key resistance level. It is extremely rare that $SPY breaks above the 70 RSI and trends farther up. This is usually the level where the momentum slows, and it is a slow grind up if the uptrend continues.
For me, the buy levels were near the 200 day and 30 RSI on many sectors and indexes the past three weeks. These provided great risk/reward ratios and quick profits. I will be looking to buy any deep dips back to key support levels, or even taking short positions on $SPY near the 70 RSI if we get there. The market is extended from the 5 day EMA. I’m not chasing.
