Financial markets across the globe have been trading within defined trends for the majority of the past several years. The rise in economic uncertainty has triggered a spike in volatility, which has led active traders to start questioning the direction of the primary trend. Recent weakness and sideways momentum does put the multi-year uptrend is in jeopardy, but the price action over the past several trading sessions is suggesting that a bounce higher could be in the cards. In this article, we take a look at three major market exchange-trade funds (ETFs) to try and determine how traders will position themselves over the months ahead. (For more, see: Stocks March Higher Despite Ongoing Risks.)
SPDR S&P 500 ETF
The S&P 500 is widely regarded as the best gauge of large-cap U.S. equities, and fundamentally, it captures approximately 80% coverage of available market capitalization. Taking a look at the chart of the SPDR S&P 500 ETF, which is the most common exchange-traded product for tracking the price and yield of the S&P 500 index, you can see that it is trading within an extremely strong uptrend. The well-defined uptrend, as shown by the dotted trendline, will likely be used by traders as a gauge for determining the placement of their orders.
The proximity of the combined support of the 200-day moving average and ascending trendline suggest that the uptrend is still secure and that the bias will remain to the upside. The recent pullback seems to now be presenting one of the best risk-to-reward setups in years. Active traders will also take note of the converging trendlines, which are forming a symmetrical triangle pattern. A break above the resistance level would likely trigger a surge of buying pressure and would put the 2018 highs back into reach. A close below the identified support levels will likely be interpreted as an end to the bullish thesis, so the next few trading sessions will prove to be important. (For further reading, see: The S&P 500: The Index You Need to Know.)
Given the proximity of major support levels and clearly defined trade setups, a significant move higher could be in the cards, despite volatility concerns. …read more
Read more here: 3 ETFs for Trading the Broad Market’s Move Higher
Category: SPY, QQQ, AAPL, AMZN, MSFT, FB, IWM