Loading ...Technical Analysis Summary of S&P 500
This is my standard intro to technical analysis – you can skip down to the table (or click “continue reading”) if you read this feature regularly:
Many people who trade in the markets believe that there are patterns that can generally lead to profitable trades. By analyzing stock charts that show the change in price along with the volume (how many shares were traded), “technical analysts” believe they have an edge and can time their trades profitably. There is significant controversy over this subject, however. Others say that, unless you have some information that no one else does, basically you can never beat “the market” because everything is already baked into the current price of a stock.
Nevertheless, supporters of “technical analysis” are everywhere, and the tools for their trade can be found throughout bookstores and the Internet. I like to follow some websites that do some of the work automatically and provide a snapshot opinion of whether a particular stock is considered “bullish” (going to go up in price), “bearish” (going to go down in price) or “neutral” (stay about the same price).
For simplicity, I’d like to start by showing you a snapshot of what several technical analysis websites suggest about the exchange traded fund (ETF) with the ticker symbol of SPY. This fund is supposed to go up and down the same as the S&P 500 index does. And many people consider the S&P 500 index (a measure of the price of the 500 largest companies that trade in the U.S.) to be an accurate gauge of where “the market” stands.
For each of the sources below, where I have a choice, I will use a measure that attempts to predict the future direction of SPY or S&P 500 in the next 3 months.
Source: Barchart.com | BULLISH
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Quick ‘n Easy Barchart.com says that SPY is positioned to rise over the next three months. The three signals are mixed in terms of strength and whether they are strengthening or weakening. Still, the overall analysis is clearly bullish. |
Source: BarChart.com
Easy Notes: BarChart.com says that SPY is positioned to rise over the next three months. This is the 11th consecutive “bullish” assessment. Although all three signals are “buy” right now, only one is at least average in both signal and direction it’s heading. So, while the current analysis is bullish, it isn’t a given that this will continue indefinitely.
According to this site’s analysis, the current price of SPY is 56 percent of the way between “support” to “resistance.” (see below for definitions) The distance between the “floor” and “ceiling” is very little. Thus, there is no clear easier path for SPY to move before meeting a barrier, and it’s possible that it won’t move very far from here for some time.
Additional Info
Support - It’s like a “floor” – a price where recent patterns have indicated that buyers will probably be more motivated than sellers, and so the price will likely not below that level.
Resistance - It’s like a “ceiling” – opposite of support – a price where sellers will likely be more motivated than buyers, and so the price will have a hard time rising above that level.
Source: CXOAdvisory.com | BULLISH
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Quick ‘n Easy CXO Advisory Group uses technical analysis to project the earnings from the S&P 500 companies as well as the expected inflation rate. Using these two estimates, it provides a projection out to three months of the S&P 500 index. It is projecting a 2% rise by the end of April 2012. |
Source: CXOAdvisory.com
Easy Notes: CXO Advisory Group uses technical analysis to project the earnings from the S&P 500 companies as well as the expected inflation rate. Using these two estimates, it provides a projection out to about three months of the S&P 500 index.
The two most reliable models (REY-M and REY-L) for projecting 3-month movements project a 2% gain from the current level by the end of April 2012, which is about a 10.4% annualized rate of growth. That is above an average pace of growth.
NOTE: I went back and changed this rating to “bullish” after the fact (two weeks later!) because I realized that I miscalculated how fast the rate of growth was projected to be. It is above average and clearly bullish, not neutral as I’d previously indicated.
Additional Info
Why does this source sometimes go against what the other ones on this list are saying? It’s because this model assumes that stocks should be valued at a certain price based on their estimated future earnings and the rate of inflation. Wherever the current price is relative to that projected price is the amount it expects prices to change. So, if stocks take a tumble, it just means they have that much higher left to go to reach the targets that CXO believes they will attain. In contrast, when stocks rally strongly, it lowers the amount left to rally for the rest of the three month period.
Source: StockTA.com | BULLISH
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Quick ‘n Easy StockTA.com analyzes numerous different technical indicators and combines them into a composite rating for either short, intermediate or long term. We are focusing on the long-term, and right now it says that SPY (which tracks the S&P 500) has “bullish” prospects. Expect SPY to rise in price over the next three months. |
Source: StockTA.com
Easy Notes: StockTA.com analyzes numerous different technical indicators and combines them into a composite rating for either short (30 days), intermediate (60 days) or long term (120 days). We are focusing on the long-term so it is as close to 3 months as possible.
The long-term rating stayed “bullish” this week for the second consecutive time. There is only one “very bearish” indicator for long-term. It looks at the volume as the price of SPY passes through relative low points – you want to see higher volume going up than you do when it passes the same point going down. There are also two”very bullish” components. First is the exponential moving average (EMA) analysis, which is a measure of the momentum of the price. The other relates to Fibonacci retracement, which looks at how much of a big move the price of SPY has retraced back. There are certain percentages of retracement that show patterns of becoming a barrier to continued price movement – in other words, there are particular spots that can predictably cause the price to reverse.
According to this site, the current price of SPY is about 76 percent of the way between “support” to “resistance” . (see below for definitions) In other words, the price of SPY is closer to the ceiling than it is to the floor. The distance between support and resistance is not too far, so it’s possible SPY will stay around the same price for a little while with an easier time moving downward than upward.
Additional Info
Support - It’s like a “floor” – a price where recent patterns have indicated that buyers will probably be more motivated than sellers, and so the price will likely not below that level.
Resistance - It’s like a “ceiling” – opposite of support – a price where sellers will likely be more motivated than buyers, and so the price will have a hard time rising above that level.
Source: Finviz.com | BULLISH
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Quick ‘n Easy The price of SPY (which tracks the S&P 500 index) stayed above the 200-day moving average – a bullish sign. Moving average is a good signal by which to judge the momentum of a stock’s price. |
Source: Finviz.com
Easy Notes: SPY closed 9.22% above its 200-day moving average (versus 7.61% above for last week), which is generally considered a good sign. The site currently indicates that the price of SPY is close to both a trendline resistance (the purpose line just above the latest price) and trendline support (probably the 20-day simple moving average). This means it may be tough for the price to make any significant movements in the very short term in either direction.
Additional Info
Moving Average – take the average of the closing price (last price of the day) of the last “X” number of trading days. In this case, we used the last 200 trading days, which is a common time frame for analysis.
Technical Analysis Summaries – Additional Sources
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Quick ‘n Easy Several other sites that provide an overview of the technical analysis of SPY are listed below. They don’t have a clear 3-month time horizon, so they aren’t included with the rest of the analyses above or in the calculation at the bottom of this page. In general, these analyses of SPY are somewhat pessimistic right now and suggest that SPY may be about to fall in price soon. |
Below, I will mention a few other sites’ analyses of where things stand with SPY. I don’t include these in my calculated average at the bottom of this page, however. This is because these other sources don’t necessarily look at a 3-month time period for their forecasts. But it’s nice to see what they are saying to get a sense for the consensus view.
Source: AmericanBulls.com | NEUTRAL | This site analyzes the last few days of trading only, using the opening price, closing price and up/down movement of the day to make a prediction. That information is translated into a series of “candlesticks” that technical analysts believe can show patterns that correlate with ups and downs.
Source: TradingMarkets.com | NEUTRAL | The “PowerRatings” system analyzes all kinds of quantitative data to forecast the price for the next 1-5 trading days, but it’s a proprietary method (i.e., a “secret”). It probably includes a lot of analyses that other sources on this page also use.
Source: StockSelector.com | BEARISH | Based on a momentum indicator (Relative Strength Index), this site believes SPY is overvalued and thus likely to fall. It signaled a “sell” back when the price was a little under $132.
Source: StockConsultant.com | BULLISH | The main reason for its bearish view is that it sees a bearish 3-day chart pattern along with the current value being right at resistance (the “ceiling”).
Easy Take
This week, there were no ratings changes. The two analyses that look at support and resistance suggest that SPY is clearly not closer to support (floor), but one thinks it may be closer to resistance (ceiling). They both suggest that there isn’t much room between the two, however, meaning that SPY may not move much in price for a little while.
Out of the four sources I’ve mentioned, we have 4 bullish, 0 neutral and 0 bearish. If we were to average these using 3 points for “bullish”, 2 points for “neutral” and 1 point for “bearish,” we’d get an average of 3 out of 3 (versus 3.00 last week). If we split the interval between 1 and 3 (which are the minimum and maximum we could get as an average) into three equal parts, that means the following:
1-1.666 = Bearish
1.667-2.333 = Neutral
2.334-3 = Bullish
Right now, the several indicators I’ve chosen to follow suggest a bullish outlook for the S&P 500 and, most likely, the market in general for the next 3 months. This outlook was bullish last week.
NOTE: The outlook shown above is based on what the sources themselves are predicting. I have been examining the relationship between my average weekly rating and what actually happens to the S&P 500 index over the subsequent 13 weeks. Based on that, I am now publishing an Easynomics forecast for where the S&P 500 will be in 13 weeks. That outlook may be very different from what it says above because it is based on the relationship between what the technical indicators say and what the end result has actually been.
NOTE: You may be reading an outdated article. Please visit my latest stock market technical analysis summary of the S&P 500 for more.
Related posts:
- Technical Analysis Summary of S&P 500 – Tech It Easy: Bulls Still in Control (Jan 14, 2012)
- Technical Analysis Summary of S&P 500 – Tech It Easy: 100 Percent Bullish (Feb 11, 2012)
- Tech It Easy: Market technical analysis summary (September 10, 2011)
- Tech It Easy: Market technical analysis summary (September 3, 2011)
- Tech It Easy: Market technical analysis summary (September 17, 2011)
