S&P 500 SPDR ETF (SPY) Breaks Major Support Line

The S&P 500 SPDR ETF (NYSE: SPY), though not yet even close to falling out of its recent bullish trading range, may have just done something far more alarming. The support line that extends back to July (and arguably to March’s bottom) failed to act as a floor today. The ETF is under it for the first time since then.

On the nearby chart, the line in question is the thin black one – the steepest one. Today’s low of $112.98 for SPDR S&P 500 fund is under it, and now that the initial damage is done, it becomes easier for more of the same.

For the time being, the bullish range that SPY has found (framed in blue) is still intact, so there’s still a shot that it could halt a pullback before it develops any significant momentum. That line’s at $110.50 though… about $2.50 under the current price of the ETF. That difference could make for a decent put option trade.

Note that a ‘deep in the money’ option may not offer enough bang for the trading buck in this scenario.