SPDR S&P 500 ETF Trust (NYSEARCA:SPY) – Where will SPY go from its 50-day SMA?


Dallas, Texas 08/21/2013 (Financialstrend) – SPY is an ETF which is unit investment trust designed to incorporate S&P 500 Index. It is incorporated in the United States. Its portfolio consists of selected 500 stocks and spread over 24 different industry groups like information technology, telecommunication services, health care, energy, utilities, financials, industrial, materials etc. The trustee of the fund adjusts the portfolio from time to time to strike the balance between the composition and weightings of portfolio stocks and component stocks of the S&P 500 Index.

After April – May and June – July this is SPY’s third drop to its SMA 50-day line. As ‘buy on dip’ strategy was recommended for SPY it’s a high time for bulls to exercise decision whether this dip is ready to buy. Between June and July the stock kept trading around its 50-day line for quite a long time before up surging and touching its all-time high of $170.97 during August. Technically it is more likely to break the level the longer the stock trades around it. Hence it is important to watch how quickly SPY will rebound off its 50-day line.

If SPY takes a further nose dive from its current support at 50-day moving average, the 100-day line would be critical to follow as the support came from this line during June – July when the SPY slump below its 50-day line. However considering the enthusiastic year-end target of 1800 for S&P 500, every dip from the widely followed 50-day level could be a good buying opportunity.

As many investors feel that the speculative rally can be short-lived, short term investors need to take into account the repeated calls from the President for avoiding another round of asset bubbles coupled with the Federal Reserve’s consideration to taper money printing and bond purchase program. Long term investors need to be ‘careful’ about rising interest rates, non – farm payroll numbers and foreign exchange trends to be rest sure of ‘bullish or bearish’ market trends.