Stalling SPY

by Paul Costa

SPY Stalling:  Tuesday SPY opened up the morning down and moved right to its uptrend line at 130.60 and bounced higher for the rest of the day closing right above resistance at 131.43.  Since Friday SPY has stayed right near this level of 131.43.  As of now the market appears to be stalling at level as the bull cannot muster enough buying at these extended levels.

This stalling at resistance comes as other indicators or influences in the market are at key levels of support and resistance and these movements will put pressure on the market. 

U.S Dollar: The dollar after declining from its long-term resistance at 81.52 has bounced back off of its support of 79.90. This is a likely bouncing point for the dollar here and it will put pressure on the market.  This morning the dollar is up and bouncing off this level. 

No Fear:  No this isn't a t-shirt slogan this comes from the VIX being so low these days indicating large amounts of complacency.  VIX is chopping around long-term support, it has strong support at 17.84 so far VIX has dropped to 18.16. It is also nearing the bottom of its downward channel and is due for a little pop which would come with a market decline. 

Overall:  Market is looking topping here as it has rallied 9% from its December lows and 23% from its October lows so a resting period/selling is needed. If the market declines here the most logical place for a decline to stop is 128.24- the level prior to the most recent breakout. 

Read more http://www.pikertrader.com/main-page/2012/1/25/stalling-spy.html