Weekly Market Review: May 22, 2009

The market action this week has established an obvious trading range of 885 to 930 in the S&P 500. By the end of the week, we're testing the lower end of this range on low volume (Figure 1). It would seem that we'll be going up from here based on the indicators.

However, on the longer term trendlines chart of Figure 2, you can see that we have broken the upward momentum from April 1st and the one in March too (a couple of weeks ago for the March line). We closed the week on a [long term support at 887 going all the way back to 2002 as I opined last week][]. So with so little volume (week before long weekend in U.S.), it's no wonder we weren't able to break this support yet.

Consequently, although I'm still bearish, my stop remains tight.

On a sidenote, my GE short position initiated this week has been great. It is a tiny position, but I am following my trading rules religiously and using my new method with good result so far. This test run is giving me confidence about this new stringent trading strategy I'm working on.

[caption id="attachment_1456" align="aligncenter" width="500" caption="S&P 500 ETF"][S&P 500 ETF][][/caption]

[caption id="attachment_1457" align="aligncenter" width="500" caption="S&P 500 ETF"][S&P 500 ETF][][/caption]

GICS Sectors Review

Ticker![][] Last![][] RSI7d![][] RSI7w![][] RSI7m![][] Zone (estimate)![][]
[XLE][] \*
48.59 46.42 60.74 39.39
[XLB][] \*
26.40 52.66 72.32 43.95
[XLI][] \*
21.77 41.93 60.23 33.45
[XLY][] \*
22.34 39.55 59.84 43.58
[XLP][] \*
22.79 57.15 65.26 40.46
[XLV][] \*
25.26 51.78 56.62 35.96
[XLF][] \*
11.74 49.79 65.53 37
[XLK][] \*
16.88 42.37 62.44 41.14
[IYZ][] \*
17.29 36.83 58.23 39.76
[XLU][] \*
25.62 33.26 43.73 22.49

[caption id="attachment_1460" align="aligncenter" width="500" caption="1 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"][1 month:
XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU][][/caption]

[caption id="attachment_1459" align="aligncenter" width="500" caption="5 days: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"][5 days: XLE
XLB XLI XLY XLP XLV XLF XLK IYZ XLU][][/caption]

[long term support at 887 going all the way back to 2002 as I opined last week]: http://www.quantisan.com/weekly-market-review-may-17-2009/ [S&P 500 ETF]: http://traderpau.files.wordpress.com/2009/05/2009-05-22-spy.png [S&P 500 ETF]: http://traderpau.files.wordpress.com/2009/05/2009-05-22-spy_prop.png [1 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU]: http://traderpau.files.wordpress.com/2009/05/2009-05-22-sectors_1m.png [5 days: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU]: http://traderpau.files.wordpress.com/2009/05/2009-05-22-sectors_5d.png