Remain Cautiously Bullish in the SPY this Week
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The SPY continues to look bullish as it trades far above its 50 day MA. We have had a couple weeks of up and down movement and this last swing up looks weaker than the week before. Both the RSI and MACD Histogram indicators show signs of a weaker push up. This last push has not gotten the strength of the previous week. Is this a sign of things to come?
The chart still looks bullish. The stock may have developed a couple weeks of peaks and valley’s but it still has bounced off the middle Bollinger Band. So the strong signs of bullishness remain.
Lat week when Bernanke stated the job growth was positive but economic growth was slow, he was attempting to justify this puzzle by reasoning that there were too many layoffs in the recession. Now how do you figure this conclusion with evidence? What else is one going to say in an election year?
The fact remains, that last week we had a slew of not so favorable (not so bad) economic numbers that did not live up to expectations. This caused us to slump a bit. This is what the markets may be questioning right now. It is not so much that we are not growing as maybe not as fast as anticipated.
US Manufacturing as an example—It slowed in February to 52.4 from 54.1 in January yet analysts expected it to rise by 0.5. It expanded, just not at the predicted rate and it is expected to continue to expand to 53.5 in the next month.
Starting this week and moving forward the big influences on the SPY will be two things:Europeand Earnings.
With this new quarter, if earnings are not up to par, the markets will suffer because of it. Meeting market expectations may be enough to keep the slow steady trend going. But then we need to consider Europe’s unfolding saga with Span andItaly.
Spain’s banks are struggling under the burden of sovereign debt as faith continues to dwindle inSpain’s ability to implement austerity measures. As happened inGreece, country wide protests are developing and the banks are going to have a hard time fighting defaults in both the private and government sectors. Then we haveItalyandPortugallooming in the back ground waiting their turn. How this plays out will also have an affect on the movement in the SPY.
Presently, we are still bullish and do not expect any big moves this week. But a bearish sentiment looms in the air awaiting the new economic reports, start of earnings, andSpain’s struggle with its debt. Stay bullish, but be very cautious.
I own no position in this stock.
