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June 6 Chart of the Day - SPX

Today we take a look at what many 401K and other related retirement mutual funds are associated with - SPX and SPY and clarify their distinct differences.

Not to be confused with SPY.  SPY is the ticker for the SPDR S&P 500, an ETF (Exchange-traded Fund) that tracks the performance of the S&P 500.  SPY aims to reproduce the change in value (performance) of a given index and to provide the same return (net of the ETF's fees) as that index.

SPX is only the symbol for the S&P500, you cant buy it directly, but you can trade it with CFD or via derivatives (Futures, options).

Many new traders confuse the SPY and the SPX, but the difference is evident when you search for the symbols in a trading platform.

SPX is a stock market index created by Standard & Poor's, which gathers the 500 American stocks that are the most representative of the American economy.

Not that we've got that out of the way...

SPX is approaching a potentially BIG decision in the way of overhead resistance in the form of support/resistance, 61.8% bear fibonacci retracement from the all time high, and a supply zone.

And this is no secret to investors and traders ranging from professional Wall St money managers to the everyday retail traders just like us.

"Everybody and their brother" can markup the same levels on a chart regardless of which charting software they use.

The big questions are 1) Can price make it up to these levels and 2) What will price do if it reaches these levels?

And what to do (if anything) if that happens.

No one, and we mean no one, knows for sure what price will do in the future regardless of their credentials, track record, or predictions (past or present).

Seemingly though, investors and traders alike tend to over think the possibilities because there are only a small number of things that could happen if price reaches these levels.

First, price could touch and drop instantly,

Second, price could behave as if the levels don't exist and just power up through them,

Third, price could break above and then come back for a retest of the levels before an upward continuation.

Fourth, price could break above and then go back to where it came from much lower (aka - fake out).

Given these scenarios investors and traders can develop a plan on how they would approach it.

And keep in mind, the VIX moves inversely to SPX and SPY as noted when VX was chart of the day.

So what is your plan?

Take a look at the charts and let us know what you think.  

We'd like to hear from you in the comments sections.

 

 

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