S&P 500 ETF (SPY): Forms a bearish Tweezer Top on monthly chart; Potential head & shoulders topping pattern on daily chart

SPY (SPDR S&P 500 ETF Trust) ($178.18)

February 1, 2014

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SPY consolidates within a 5-day range under Jan 30’s 179.81 high;

176.88 (Jan 29 range low)/177.32 (Dec 18 reaction low)/177.98/(Nov 20 low) becomes key support area;

Potential head & shoulders topping pattern could be forming if the above support line (pink) is broken;

Forms a bearish Tweezer Top (184.69 (Dec 2013 monthly high)/184.94 (Jan 2014 monthly high) which typically resolves to the downside;

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SPY:  Consolidats within a 5-day range under 179.81 last week. Weakening momentum and bearish RSI divergence continue to weigh. The pink trendline (connecting 176.88 (Jan 29 range low)/177.32 (Dec 18 reaction low)/177.98/(Nov 20 low)) forms the potential shoulders line of a 3-month head & shoulders topping pattern which requires a breakdown to confirm.

 

If SPY bounces off the 176.88 support near 38.2% of the upmove from 10/9/13 low (164.53/184.94 rise) and 100 day moving average at 177.00,  that would prolong the consolidation and reopen the 179.81, then 181.75 (11/29/13 range high/181.66 (1/24 daily high-gap low)/181.34 (1/13 range low) short-term resistance area.

 

If SPY decisively breaks below the aforementioned pink-line support,  medium-term supports rest at 174.76 (Nov 7 higher low) near 14-month bull trendline from November 2012 low (connects 11/16/12 and 10/9/13 lows) and 50% of the 164.53/184.94 rise.

 

Beneath would open 173.60 (9/19/13 high) near 23.6% of the entire upleg from 11/12/16/12 low (134.70/184.94), 170.97 (8/2/13 high) /169.07 (5/22/13 high) near 50% of the upmove from 6/24/13 low (155.73/184.94), the 200 day moving average and potential H&S target.

 

Long-term supports lie at 164.53 (10/9/13 higher low) near 38.2% of entire upleg from 11/12/16/12 low (134.70/184.94) and 159.71 (4/11/13 high)/160.22 (7/3/13 low) near 50% of entire upleg from 11/12/16/12 low (134.70/184.94)

 

Momentum: Daily – Sell mode; Weekly – Sell mode; Monthly – Sell mode (Overbought/Tweezer Top)

Resistance:

***184.69 (12/31/13 high)/184.94 (1/15 record peak) double top area

181.75 (11/29/13 range high/181.66 (1/24 daily high-gap low)/181.34 (1/13 range low)

*179.81 (30 Jan range high)

Support:

***176.88 (Jan 29 range low)/177.32 (Dec 18 reaction low)/177.98/(Nov 20 low) near 38.2% of the upmove from 10/9/13 low (164.53/184.94 rise) and 100 day moving average

177.64 (11/7/13 range high) /177.51 (10/30/13 range high)

174.76 (11/7/13 low) near 14-month bull trendline from November 2012 low (connects 11/16/12 and 10/9/13 lows) and 50% of the upmove (164.53/184.94)

173.60 (9/19/13 high) near 23.6% of the entire upleg from 11/12/16/12 low (134.70/184.94)

170.97 (8/2/13 high) near the 200 day moving average

**169.07 (5/22/13 high) near 50% of upmove from 6/24/13 low (155.73/184.94) and potential H&S target

164.53 (10/9/13 higher low) near 38.2% of the entire upleg from 11/16/12 low (134.70/184.94)

159.71 (4/11/13 high)/160.22 (7/3/13 low) near 50% of entire upleg from 11/16/12 low (134.70/184.94)

157.52 (10/11/2007 peak) near 23.6% the entire upswing from March 2009 low (67.10/184.94)