SPY stalls in an uptrend
The S&P 500 ETF (SPY) stalled for the third day running as the ETF formed its third indecisive candlestick in a row. While this indecision can sometimes foreshadow a reversal, stalling is not the same as weakness. At this point, it is just a rest within the advance, which began in early February. It would take a long black candlestick to argue for an actual reversal. A rising wedge defines the four week uptrend with key support set at 109. RSI edged above 60 for the first time since January. As with SPY, RSI is also trending higher and I would mark momentum support at 50. A break below 50 would likely coincide with a trendline break in SPY.
On the 60-minute chart, SPY broke flag resistance and this breakout is holding. The ETF surged above 112 and then stalled the last three days. There is even a minor support level at 112. Key support remains at 110.5. This area is marked by broken resistance and the 50-62% retracement zone. A break below this level would provide the first evidence of a short-term trend reversal. At this point, the next signal may depend on the reaction to the employment report. Perhaps I have built it up so much that reaction will be muted. Regardless of the report or the reaction, the trend is clearly up as long as short-term support holds.
