BULLISH SIGN (short) in mid of BEAR MARKET ?

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This article is a continuation of what I wrote two weeks ago about SPY (spider). As we know that S&P 500 is the pulse of overall market direction/condition, it is worth to see its price action. For the consistency of analysis, I also used two past weeks data. Despite price broke down from the rising wedge (see April 9,2008 article), price was able to rally again to SPY 139 due to good 1^st Q earnings from leading companies. 30 dma has more conviction on the upward move. Despite it is still a process to cross the 50 dma, but the angle upward movement was getting steeper. Double bottom presence was replaced by the forming reverse Head and Shoulder pattern. Once the price have technical break out of SPY 140, we will have more conviction on this sign.

I still believe SPY 140 is still a strong resistance line. However, price has tested 200 dma and this made this resistance line getting weaker and weaker. SPY 145 will be the next resistance point should price break out SPY 140. It would be hard to surpass this line since we are still on Bear Market and market needs more time to recover.

For Neutral Options Player, watch out for the break-out SPY 140. You may reduce the short (bearish) position should technical show this conviction. I will be more comfortable having neutral to bullish sentiment on this short time period. But......always look for price action..... (as quoted by Brian Shannon).