SPDR S&P 500 ETF Trust (NYSEARCA:SPY) : Bullish Breakout Above $201 for Targets of $205-$210

Posted by: : HEFFX Equities ResearchPosted on: September 17, 2014 SPDR S&P 500 ETF Trust (NYSEARCA:SPY) : Bullish Breakout Above $201 for Targets of $205-$210

SPDR S&P 500 ETF Trust (NYSEARCA:SPY) : Bullish Breakout Above $201 for Targets of $205-$210

Shayne Heffernan Economist at HEFFX said “it is possible we go as high as $210, but in the mid term the danger of a collapse outweighs the upside for investors”

SPDR S&P 500 ETF Trust (NYSEARCA:SPY) (Closed: 200.52, Up: 0.75%) has been considered the largest ETF in the world for a long time and also the best tracker of the S&P 500 index. In April 2013, at 117 million it had the highest average volume of any ETF. Though the average has come down a lot since then and stands at 85 million for now, the Tuesday volume of 116 million shows the immense interest it still commands even after the advent of its many competitors.

For the last nine sessions, it has been in a very shallow correction and has been making a Bullish Flag. While the old highs of $198-199 keep providing support, only a break above 201 would signal the end of the consolidation in the range and a resumption of the rally. The Bullish Flag has a pattern implication target of $210-11. The candle formed on the last session was strongly bullish and engulfed the price action of the previous five sessions, suggesting impatience on the part of the bulls to run away to new highs only if the FOMC meet today help them a little.

The longer term chart definitely shows some contraction over the months but the rally from the 2011 bottom of $107.43 shows no actual sign of fatigue. A closer look shows the entire rally from the low of $134.70 till now to be supported by a long trendline, currently standing around $195. As long as this trendline remains protected, the uptrend and the bullish momentum remain intact. One must note that a break above $205 by the end of the next week would signal an acceleration of the uptrend and trigger a rally for targets of $225 and even higher.

Investors have two choices in this case. The aggressive ones may enter the ETF on a break above $201 and watch the price action near $205. The patient investors can buy only on a break above $205.

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