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SPY: Bull Trap Remains

Figure 1 is a weekly chart of the S&P500 Depository Receipts (symbol: SPY).

Figure 1. SPY/ weekly
SPY weekly chart
Larger Image

Focus on the gray oval. The QE3 announcement week resulted in a break out, but it appears that this breakout will turn into a bull trap. The failure of price to hold above the rising trendline should be concerning to the bulls. Failed breakouts often lead to strong moves in the opposite direction. Resistance is at the key pivot point of 146.34, and support is the low of the negative divergence bar (pink labeled price bars). A weekly close below this low at 142.95 would likely confirm the double top.

This is a bull trap until proven otherwise.

 

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