Is $SPY Exhausted Yet In Uptrend? $EURUSD Just Spiked to 1.317! (Technical Update)

Here is some technical analysis for $SPY (the S&P 500 ETF) and EUR/USD. EUR/USD just pierced through October 2011 resistance and hit 1.317. The euro spiked against the dollar yesterday after the Fed (FOMC) said they anticipate "exceptionally low levels for the federal funds rate at least through late 2014." The FOMC kept the rate at 0-0.25%, and are continuing to reinvest principal payments from agency debt and agency mortgage-backed securities in agency MBS. It is interesting that EUR/USD's current uptrend line has the same exact slope as the October 2011 uptrend line. Y=mx+b algo? While the Euro is flying high, there is still a risk it could breakdown if there's a negative euro-zone catalyst, negative ECB catalyst, or expectations of a disorderly default by Greece. Simon Derrick, chief currency strategist at Bank of New York Mellon, told Bloomberg TV on 1/19/2012 that he thinks the Euro could trade down to 1.15-1.20 during the quarter. Other euro bears believe it will eventually hit parity with the dollar. For now, EUR/USD is climbing in an uptrend inside a descending channel.

EUR/USD (source:

As the U.S. Dollar fell yesterday, $SPY rose 0.84% to close at 132.56. Since EUR/USD has already made a decent move to the upside after breaking through a multi-month downtrend line, I think the S&P 500, or $SPY in this case, is setting up for a trend reversal, or correction at least, in the steep uptrend from 12/11/2011 (blue line). If there is a strong trend reversal and confirmed technical breakdown, it could be a decent short down to the ultimate uptrend from the October 2011 low (white line), which would then decide its fate. That's if and when it tests the uptrend again. Remember the whipsaws in EURUSD this month before it finally made its decision to breakout? Last Friday on Bloomberg TV, Tom DeMark, creator of the DeMark Indicators that signal market exhaustion, predicted that the S&P will top out between 1,338-1,342 this week (SPY: 133.8-134.2). The S&P hit a high of 1,328 today, and the downtrend using the 2007 and 2011 peaks hits around 1,333. So the market is at interesting levels. As always though, it's all about timing. Trend lines always win in the end, not someone's price target. Below are short and long-term charts of $SPY. Check out the volume as well. It's been trending down since the August crash.

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