Friday’s gains are currently history and investors better be paying close attention to the daily buy/sell pivots if they are staying in the market over the coming Fourth of July week. We are tracking the daily buy/sell pivot points on the SPDR S&P 500 (NYSEMKT: SPY) as the most liquid equity ETF on the market to help traders and investors avoid buying at the wrong time or shorting just before a intraday rally.

Erlanger Value Lines are designed to identify key levels for the intraday trader or for anyone trying to establish a new position during trading hours. The Value Lines fall into three categories: Support and Resistance, Extreme values and Range values. From a practical point of view, the Value Lines can act as targets and triggers for short-term trades.

Some think it is uncanny how these levels stop or turn back short-term price swings. We do not. Why? Because both high frequency traders and program trades have built these levels into their models which cause them to gravitate to resistance, pivot or support along with range values like the 5 and 60 minute ranges. We have compiled here the daily chart, the daily analysis for traders to use, and then we have followed it with a general guideline after the daily commentary along with a sample chart.

For Monday’s S&P 500 SPDR chart analysis, Phil Erlanger said, “Friday saw the SPY close above resistance and was a Buzz Lightyear Day. i.e. “to infinity and beyond”.  We noted that, “One could try to short a break of the 5 minute low, if you are brave, which is $134.98. Then cover if this reverses to the upside.” That never happened so there was no pain on the short side. Today sees SPY trading just below resistance at $136.64. Pivot is at $135.74. Remain with a long bias and add on a break above resistance. Attempt the short side on a break of pivot.”

We are looking for  a rate cut from the ECB this Thursday ahead of U.S. unemployment on Friday.  With J.P. Morgan Chase (NYSE: JPM) trying to regain its footing again and with General Electric Co. (NYSE: GE) selling off after hitting a year-high close, the S&P pivits are going to really matter on a low trading volume week.

Due to such light trading volume expected after Monday, this is our only post of the week. If you wish to receive updates next week, then we suggest you sign up for a free 30 day trial to www.goodmorningwallst.com to receive our comprehensive Value Lines email along with our monthly commentary due out this week.

The Erlanger Value Lines can be accessed via Erlanger Chart Room. The daily service gives investors and traders access to critical buy/sell levels on the S&P 500, NASDAQ, DJIA, Oil Services Index, gold & silver, any index or equity, as well as analyzing short-squeeze opportunities and more. For more information we direct you to sign up here.

General Notes:

• If price moves above the red Resistance value line, then the intraday bias turns positive:
• A positive bias reflects times when only long trades are considered.
• If price moves below the green Support value line, then the intraday bias turns negative:
• A negative bias reflects times when only short trades are considered.
• If price remains within the green Support and red Resistance value lines, then the bias is neutral. The pivot line can be used to establish an intra Value Lines bias. Pivot to Support is negative and Pivot to Resistance is positive.
• If price remains within the first hour high and low value lines, then the bias can also be viewed as neutral. This is especially true if the first hour range is inside the range set by the support and resistance value lines:
• A neutral bias reflects times when both long and short trades may be considered or (depending on the traders style) a time for no trading. All Erlanger Value Lines can be used as short term target levels. This is especially true if a few are clustered together.

July 2, 2012

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