This morning’s first-hour breakdown in the S&P 500 Depository Receipts (AMEX: SPY) from 107 to 106.11 was mostly recovered in the second hour. Let’s see if the recovery can continue to claw its way above 107.50, which will confirm that a new, secondary upleg is in progress that will have the potential to climb to 109.00/50.

Conversely, inability of the SPY to hurdle near-term resistance between 106.80 and 107.25 likely will result in another loop to the downside that retests this morning’s low at 106.11, as the countertrend rally off of last Friday’s low at 104.58 morphs into a sideways contracting-type rangebound corrective pattern.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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