$SPY increased 30% from $66.62 to $86.54 in a little over a month so it could take a rest eventually. Today retail sales numbers took the S&P down 2%. Total sales declined -1.8% vs. consensus +.03%. Here is Briefing's take.
"The fairly broad declines in sales for retail businesses in March has created some concern that the improvement in January and February might have been owed more to a temporary bounce than anything else following some bleak sales reports in the fourth quarter. This isn't good economic news and it certainly fits more with the weak employment data than the surprisingly good reports seen in January and February. It is a setback that is apt to cause a number of investors to second guess the big run seen in the retail stocks." (Source: Briefing.com)
Even with decent news from Goldman Sachs and Wells Fargo , I'm wondering if poor earnings or an ugly GM bankruptcy could throw the market a curve ball. Also if the S&P wants to hit 1100 by year end (Leuthold Group's call), a minor fib retracement would provide a stronger foundation IMO.
The $SPY is testing its long term downtrend as well as 87 ceiling resistance. A break above those levels with volume would give victory to the bulls and the economic recovery. If it fails, the 50 day moving average and $80-ish look like decent support levels. SPY hasn't officially broken down yet so watch for the TIPI break!.
$SPY 1 Year Chart (Source: Stockcharts.com)
At Monday's close the Put/Call Open Interest Ratio stood at 1.53. It's interesting that puts to calls open spiked along with the market. So there's either big time hedging going on or tremendous skepticism of the recent rally.
It's not surprising that the Put/Call Volume Ratio tanked during the rally. It looks like it could be forming a base again.
Also look at the $VIX (the fear gauge). It's been in a steady downtrend since the Lehman bankruptcy. Are the skies friendly again?