The pullback in stocks this week has S&P 500 exchange traded funds testing a key technical indicator as investors look for resolution on the U.S. debt limit.
SPDR S&P 500 ETF (NYSEArca: SPY) and iShares S&P 500 (NYSEArca: IVV) were down 1.4% in afternoon trading Wednesday. The ETFs were also testing their 50-day exponential moving average.
“The meandering continues as the SPDR S&P 500 ETF tumbles back towards the middle of its multi-month range,” said the Coe Report, a newsletter from Investors Intelligence.
Stocks were lower Wednesday after the Commerce Department reported durable goods orders fell an unexpected 2.1% in June
Investors are growing increasingly worried the U.S. debt limit won’t be raised by the Aug. 2 deadline, which may trigger a default.
“The weakness is news driven — well the lack of it from Washington. When details of a debt ceiling deal do cross the newswires it will likely cause the fund to pop higher rather like the sudden release of a balloon held forcibly under water,” said technical analyst Tarquin Coe.
“Consequently we are not advocating bearish trades in this climate as they may soon be severely squeezed. In the meantime we continue to favor fat dividend paying stocks or precious metal related stocks and ETFs,” he wrote in a newsletter Wednesday. [Gold Miner ETFs Rally Back Near Lifetime Highs]
SPDR S&P 500 ETF
