S&P 500 Weekly Update for October 2, 2009

The exponential moving average strategy continues in the bullish column. Saying that, I am cautiously optimistic that the bullish trend will continue. The average cost of the SPY's holdings is $104.24. Given today's close of $102.49, the portfolio is down 1.67%.

The following chart depicts the weekly 15 and 40 EMAs of the S&P 500
Note: Double-click inside of chart to enlarge it.

The next chart depicts the daily price along with the 50 and 200 EMAs for the SPY for the past year. What the daily chart is indicating is that the current weakness may carry the SPY down to its 50-day EMA ($101.64), which we are there now. If that price support level is penetrated, the next support level is the 200-day EMA at $96.50.

Note: To enlarge the chart, double-click inside of it.

Why am I illustrating the daily chart for SPY? Let me explain it this way. The weekly EMA strategy provides me with the long-term trend for the market. Currently, the long-term trend is bullish. Therefore, investment dollars and any additions are allocated to the bullish positions. I use SPY's daily EMAs, stochastics, and CCI to determine when to make such purchases. Since these indicators are currently negative, I will hold off making any additional purchases until these indicators turn positive.