Week Ahead: Stock ETF Chart Analysis - SPY, IEV, EEM
Stock markets are moving higher once again as bullish investors have been inspired by the latest round of public commentaries that have been released by the US Federal Reserve. For the most part, these commentaries have supported the idea that the Fed is willing to hold off on any major policy changes at least for the next few months. Since it is unlikely that we will see interest rates that are much higher before the end of this year, corporate earnings results should continue to surpass analyst expectations. And this means that stock markets should be able to hold their current gains -- even at these elevated levels.
All of these factors will be important for those interested in buying in the major stock benchmarks, so here we will look at recent activity in the SPDR S&P 500 Trust ETF (NYSE: SPY), as well as the iShares S&P Europe 350 Index (NYSE: IEV) and the iShares MSCI Emerging Markets Asia ETF (EEM, Financial).
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SPDR S&P 500 Trust ETF (NYSE: SPY)
Critical Resistance:216
Critical Support: 200
Trading Bias: Buy Dips
(Chart Source: CornerTrader)
S&P 500 / SPY - Stock Trading Strategy: Momentum is still clearly focused on the upward direction but wait for dips before taking new longs. First support comes in at 200.
“It is undeniable that we are still firmly entrenched in an uptrend for the SPY,” said Ryan Mitchell, head trader at Australian Stock Report, “so traders that are looking to implement momentum strategies will clearly be looking for new areas to start building long positions." And it should be remembered that we are trading at all-time highs here, so this does not create an attractive framework for those looking for a solid risk-to-reward ratio. Because of this, it makes sense to wait for dips back into support, first level comes in at 200.
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iShares S&P Europe 350 Index (NYSE: IEV)
Critical Resistance:46
Critical Support: 40.60
Trading Bias: Breakout Potential Ahead
IEV Europe ETF - Stock Trading Strategy: Markets appear to be turning around here, watch for a break of resistance at 46 to confirm activity in the new trend.
The IEV ETF has been beaten up over the last few months, but there is strong reason to believe that all of this bearish activity is now coming to an end. Prices have stabilized since October and now all that we need to confirm the potential uptrend is to see a break of resistance at 46. MACD readings have become overextended so we might not get through this barrier on first test. Breakout strategies still prevail however as long as 40.60 support remains intact.
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iShares MSCI Emerging Markets Asia ETF (EEM, Financial)
Critical Resistance:45.10
Critical Support: 38
Trading Bias: Bullish
EEM ETF - Stock Trading Strategy: EEM still looks cheap relatively to historical averages, look to build longs at current levels.
The EEM ETF is trying to turn the corner but those that are bullish should be somewhat cautious in establishing new positions. MACD readings have moved into positive territory and this is encouraging for the long term outlook in the ETF. Bullish bias prevails as long as prices hold above support at 38. Risk-to-reward clearly favors the topside and prices are cheap enough to warrant new long trades at current levels.
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