Figure 1 is a weekly chart of the S&P Depository Receipts (symbol: SPY).
The red and black dots are key pivot points, which is a concept that I have
developed that defines the best areas of support (buying) and resistance (selling).
Figure 1. SPY/ weekly
Several weeks ago the SPY broke above the key pivot point (or resistance level)
at 133.82; see the red arrow on chart. In my book, a close above a resistance
level would be a breakout. However, the breakout failed and prices are now
back below the resistance level at 133.82. Failed breakouts are rarely a good
thing, and often portend lower prices. Support is at the rising 40 week moving
average (obvious, knee jerk reaction). The next key pivot point support comes
in at 120.79.
Figure 2 is a weekly chart of the PowerShares QQQ Trust Series (symbol: QQQ).
The key pivot points are shown, and the failed breakout is at the 58.46 level.
This is now resistance. Support comes in at the nice round number of 50. The
rising 40 week moving average may offer some "comfort" to the bulls.
Disclaimer: Guy M. Lerner is the editor and founder
of The Technical Take blog. His commentary on the financial markets
is based upon information thought to be reliable and is not meant as investment
advice. Under no circumstances does the information in his columns represent
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all positions are fully disclosed at http://thetechnicaltakedotcom.blogspot.com/.
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