Market, SPDRs (SPY) Now Taking on Water

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January 20, 2010

The S&P 500 SPDR ETF (NYSE:SPY), though not yet even close to falling out of its recent bullish trading range, may have just done something far more alarming. The support line that extends back to July (and arguably to March’s bottom) failed to act as a floor today. The ETF is under it for the first time since then.

S&P 500 SPDR (SPY)

On the nearby chart, the line in question is the thin black one - the steepest one. Today’s low of $112.98 for SPDR S&P 500 fund is under it, and now that the initial damage is done, it becomes easier for more of the same.

For the time being, the bullish range that SPY has found (framed in blue) is still in

tact, so there’s still a shot that it could halt a pullback before it developed any significant momentum. That line’s at $110.50 though… about $2.50 under the current price for the ETF. That difference could make for a decent put option trade.

Note that a ‘deep in the money’ option may not offer enough bang for the trading buck in this scenario.

Today’s Best

Incredibly enough, some stocks and industries are up today. Given the sheer resistance to a marketwide panic, the reason any stock or sector is up today is worth exploring. Note that both of today’s groups are also considered defensive in nature.

Best-performing industries, as monitored and grouped by Standard & Poor’s:

Industry: Today’s % Change (% Chg 1 Mo.)
Agricultural Prod: +1.52% (+0.0%)
Oil, Refin & Mkt:g +1.15% (+11.0%)

Today’s Worst

It’s not hard to find a losing sector today - almost all of them stink. The worst of the worst, however, may be particularly problematic.

What’s interesting is how today’s biggest losers are some of the biggest winners over the last twelve months. Profit-taking? Probably, though if that’s the case, more profit-taking could be in store.

At any rate, these industries deserve some special attention based on their extreme weakness.

Worst-performing sectors in S&P 500 index: