Saturday, July 25, 2015

S&P Dividend ETF (SDY) Appears To Be Breaking Weekly Support

At some point if the share price was right and dividends were more attractive, I wouldn't mind owning a position in SDY. Right now, from a purely technical basis, I am not interested.

Why?  As the weekly closing price chart below shows, SDY's price has been climbing within a rising channel/wedge since 2009. The support line (solid green) for the channel/wedge is being seriously tested, if it has not already been broken. 

click chart to enlarge

In my opinion, a break in this support line would represent a change in investor sentiment concerning SDY that could lead to lower share prices.

Hence, I will be patient and watch for a future buying opportunity as it seems likely to me that eventually a lower share price and higher yield will be available at a point in time where I can establish a "buy and protect" position/strategy.

Update (8/14/15): SDY appears to have regained but barely holding onto weekly support.  Note possible overhead resistance (dashed red).

click chart to enlarge

Again, this is not investment advice relative to SDY.  This is simply an educational example of how I use technical analysis to help determine if it is the right time to buy shares in a security that may be an appropriate investment for me. Of course, this security may not be appropriate for you - so please see an investment adviser if you cannot make your own decisions regarding proper investments for you and/or your family.

Not Investment Advice | Important Disclaimer: 
The content in this article, including the identification and discussion of any specific security (e.g., bond fund), is NOT meant to be and should NOT be construed and/or used as investment advice. This article is for general information and educational purposes only. Please read the Disclaimers  for in their entirety. The U.S. Securities and Exchange Commission website has guidance on selecting an investment adviser.

Financial Disclosure:
The author/publisher has no position (long or short) in SDY at the time this article was written. This position may change depending on future price action.

 Base Chart Provided Courtesy of  Analysis and Annotation by JunkBond (all rights reserved)

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