SPY Analysis for 12/7/09

The BATTLE LINE has been drawn near 112 which is the location of the downtrend line which connects the 2007 & 2008 highs as well as being the level of the 50% retracement of the 07 high to the 09 low. Short term volatility in this area is causing causalities amongst the bulls and bears alike except for the quickest of traders who focus on the shortest of timeframes. The primary trend remains higher and a close above 112 would boost the confidence of buyers, but a break of 110.40 would give reason for us to look for a selloff down towards 108.75-109, the lower end of the recent range. Individual stocks are where the better action lies while the market searches for near term direction.

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