Securities Research Services

Thursday, May 08, 2008

Sell in May and Go Away?

The SPY, after finding massive resistance at its 200-day average, dropped down to the bottom of its price channel, which represents support for the near term uptrend.

Volume wasn't spectacular, so there are no guarantees it will break through this support area right away. We may or may not get a minor bounce here.

Two things are clear though. First, any reattempt at the 200-day average offers an excellent shorting opportunity. Second, when the price does break through the floor of this price channel, look out below as the selling is likely to be fast and furious.


A breakout appears unlikely as the bull trap appears to have been set. We suspect that any early buying now will be faded as smart money puts on short positions.

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