Tuesday, March 24, 2009

Zignals Stock Charts: SPY and MIDD

The rally for the past couple of weeks has been a welcome relief but it hasn't got the indices out of the woods, nor indeed kicked off a new bull trend. However, it has given the markets a floor on which to work with. If the indices (tech and small caps in particular) can push through some of the supply zones in the market - most notably of which will be the January highs - then one can look with reasonable confidence for a larger push to the area of last September's meltdown.

The S&P (SPY) is nestled against declining resistance dating back to October. After the series of gains it has it will surely make a bigger return move than the 2-day attempt from last week. All eyes will be watching to see if March lows can hold.

The FTSE 250 (MIDD) has been far more resilient than the S&P 500, staying well above November/December lows. The ETF has traded in a steady range between 697p and 555p; a break of 700p would set the cat amongst the pigeons as anyone who took a stab at buying the market from last October onwards would then be sitting in a profit.

If 700p was breached the target of 810p (i.e. the start of the September breakdown) may be considered a little conservative with the potential for follow through to August highs of 947 a more enticing prospect.

One ETF stuck in a perpertual rut is the ISEQ 20 (0ESE). The high financial and property exposure of the Irish market help send the ISEQ 20 ETF into a death spiral from which it has yet to emerge. To break the bear market would require the ETF to get above €5.67; a tall order from its current price of €3.89.

So look to the UK for leads...

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website