Weekly Market Review: June 5, 2009

We started June with a sizable gap up on Monday. For the rest of the week, not much have happened as we nearly closed the gap on Wednesday and made a double top this morning (Figure 1). Nevertheless, we have maintained an elevated level above 940 on the S&P500 throughout the week. Interestingly, we closed the week right at 940 today.

From Figure 2, it's clear that we're back on the upward channel established in April. Apart from last week's consolidation, the price has been following the channel well. It is obvious to everyone now that we're in a bull phase. So, can we finally break this rally and move down? I gave up trying to guess anymore. That's why my only new position this week is an options strangle for XLF. Just trying to profit from both sides of the game.

The top and bottom of this week's range provide a good indicator for next week's resistance and support, respectively. Thus, the notable levels are 925 and 950 for the S&P500.

[caption id="attachment_1506" align="aligncenter" width="500" caption="S&P500 ETF"][S&P500 ETF][][/caption]

[caption id="attachment_1507" align="aligncenter" width="500" caption="S&P500 ETF"][S&P500 ETF][][/caption]

GICS Sectors Review

The chart below is taken from CaraCommunity's RSIApp. Compared to last week, we're finally starting to see some sectors (XLP, XLK) creeping into an overbought territory.

Ticker![][] Last![][] RSI7d![][] RSI7w![][] RSI7m![][] Zone (estimate)![][]
[XLE][] \*
52.54 61.37 69.05 46.71
[XLB][] \*
27.94 61.64 69.28 49.21
[XLI][] \*
23.53 64.71 66.44 44.24
[XLY][] \*
24.16 64.39 68.37 49.38
[XLP][] \*
23.74 69.23 75.62 49.49
[XLV][] \*
25.74 53.61 62.94 43.96
[XLF][] \*
12.43 61.17 66.38 41.72
[XLK][] \*
18.16 69.64 70.3 49.73
[IYZ][] \*
18.01 56.67 63.95 44.76
[XLU][] \*
27.09 57.47 59.64 37.09

[S&P500 ETF]: http://traderpau.files.wordpress.com/2009/06/2009-06-05-spy.png [S&P500 ETF]: http://traderpau.files.wordpress.com/2009/06/2009-06-05-spy_prop.png