S&P 500 Analysis (SPY) – Third Time’s a Charm?

SPDR S&P 500 (SPY)

SPY Technical Analysis - Click to enlarge

We’ve all seen S&P 500 and the general market sell off in the past since March of 2009.  Each time though, the bulls shrugged it off and came back even stronger.  Time after time, the bears were caught and the bulls prevailed.  By Q4 2009, no longs believed the sell-offs will last.  And they were right.

Almost a year later since the March ’09 low, we’re facing a similar situation: another sell-off.  Many still believe longs are taking a break, and that they are simply waiting for another entry point.  However, people are starting to take more caution this time around for the bullish side.  The sentiments I see aren’t as positive as they were previously.

We saw the market dip below the 50 day moving average in July ’09.  It was a teaser for the shorts.  The market did it again in November ’09.  Another tease.  Now the market is doing it again, with legit force.  Third time’s a charm?

No one knows for sure, but what I am doing is paying close attention to the support lines shown in the chart.  If the third support line is broken, there aren’t many notable supports left for a while.