SPY Breaks Correction Lows

- Technical Market Commentary -

August 3, 2011 (FinancialWire) (By Frank Kollar) -- Both the S&P 500 Index (SPX) and its tracking ETF, the SPDR S&P 500 Trust SPY have broken below key support levels, closing below both their March and June correction lows on Tuesday.

SPX and SPY both have a well-defined bearish head-and-shoulders pattern in place, using the February rally highs, April rally highs and July rally highs. All of those rallies have now failed, but this latest decline has broken below all of those previous the low points.

A short position can be entered for the SPY using a buy stop around $128. This is a risky trade, though, as the SPY has now declined seven days in a row and a bounce is likely no matter what the trend is.

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Disclosure: Frank Kollar's Fibtimer.com ETF Timing Strategy holds a position in the SPDR S&P 500 Trust.

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Frank Kollar has been timing the financial markets since 1982, with online service since 1996. He is a dedicated trend timer and his strategies exited the markets before the crash in 1987 as well as the bear market in 2000 through 2002. During the 2000-2002 bear market and the 2008-2009 bear market his bearish positions resulted in substantial gains, all achieved by trading trends.

Kollar's research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.

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This and all original content authored by Frank Kollar are subject to proprietary trademark, intellectual property and copyright Laws. Copyright (C), Frank Kollar; All rights reserved.

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