The popular averages again closed to the upside on Tuesday. New home sales declined more than expected in April. The Markit manufacturing and services outlooks have both remained optimistic this month. Meanwhile the price of crude oil rose while that for gold fell on Tuesday.
Above is my 3-month chart of the S&P 500 exchange traded fund (SPY). The uptrend picked up significantly as February began, which eventually led to a number of record closes including March 1. The white horizontal line in the chart indicates a level that was resistance in mid-February and then support in late February. It proved again to be support early in March. However it was decisively pierced downward on March 21.
The SPY 50-day-moving average provided support in late March before briefly giving way intraday on March 27. It gave way again in early April. Then it closed nicely above both the 50-day MA and my white line on April 24, and had been holding rather steadily above until jumping to near its record closing price on May 5 and achieving a new one on May 15.
The panic selling on May 17 apparently due to political rather than business concerns resulted in the SPY falling through its 50-day MA yet holding just above my white line. On May 18 cooler heads seemed to prevail as the SPY first leapt above my white line and then pushed back above the 50-day MA with continuation on May 19. The gap created between the May 17 low and the May 18 high was filled on Monday followed by continuation on Tuesday. That’s a good sign.
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