Yesterday I went back into cash for a very small loss on a long of less than 1%.
The reason I recommend we go back to the sidelines is that on the hourly chart, the SPDR S&P 500 ETF (SPY) went below a major uptrend line that had been in place for the last seven trading days and has now moved into a sideways consolidation pattern.
Lower support is 111 and upper resistance in the rectangle pattern is $113.
I give the advantage to the bulls right now with the $VIX in a downtrend.
If the SPDR S&P 500 ETF (SPY) can break above $113 next Tuesday or Wednesday and you get at least 1 or 2 days of confirmation after the break on average or better volume, we could see a move up to $120.
If you are long this market then you really need to have the lower support in the rectangle pattern level of 111 hold.
In the video below, Lance does technical analysis on the SPDR S&P 500 ETF (SPY) and looks at the main uptrend line that was broke on Thursday, June 17 2010 that stopped the most recent advance and put SPY into a sideways rectangle pattern.
Next week look for housing data on Tuesday and Wednesday, durable goods and jobless claims on Thursday, and the third estimate for first quarter GDP on Friday. Each and every one of these economic statistics releases have the potential to move the markets.
Hope you get in some terrific weekend research and happy father's day to all you Dad's out there.
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