Friday, July 6, 2007

Is It Time To Go Long?

Several technical indicators have given preliminary buy signals on the SPY. The MACD has turned bullish and the CMF is hovering around 0 where a few strong days could send the indicator into buy territory.

However, there are two concerns going forward.

1.) Here is a 5-year, weekly chart. Notice the index has moved up strongly and sharply over the last few months. In addition, notice the big pick-up in volume during this rally. This could be a buying climax, which is a sign of a market top.

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2.) In addition, we are still in a downward trend with lower lows and lower highs. The market would have to break through the top downward sloping line and/or move above a previous high on decent volume to give a buy signal.

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