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Friday, September 11, 2009

Close to The Edge

Here is a 3 month chart of the SPX. The pivot I decided upon this morning at 1039 was pretty close, as we hit a low of 1038. The intrady resistance level at 1050 almost got tested, the high was 1048. On a longer term basis (a week or so) i have support at 1018 and resistance at 1060 (once again, not real resistance, just equal distance from the pivot). Looking at this chart, I had a trend line from the July low leap out and bite me. For once, we had a lower volume down day.

The 50% retracement level on the weekly chart is blue. We are well below there (about 1120) and have plenty of room to move up. While you have to expect lower volume on a holiday shortened week, it did not seem as though there was a rush of volume coming in this week. We've all been hearing about the fund managers who are going to be buying because they missed the rally from March,l and how bullish that is. And just who will the "dumb" managers be buying from? Porbably the "smart" managers who didn't miss the rally.

My, my, what a week on the Nasdaq. For the week, it a)outperformed the SPX, b) broke the descending trendline, and c) broke through the 50% retracement level. I expected a rip-your-face-off bear market rally, but this is sure looking like more than that.

The Dow is still playing catch-up and is well below the retracement level. It's trend is not straight up like the Nasdaq, and may actually be sustainable.

And that brings us to the Russell 2000. It topped earlier than the other indexes. The 50% retracement is right around 600 (I think 602 was the value I had calculated once), and we are right there. Stochastics on the other indexes are totally inconclusive, but here they are weakening slightly. It looks like early next week we could get either a breakout or break down, so I will be keeping a close eye on this.

Tim Knight has come out with his targets for the SPX, and I can't really find fault with them (other than the fact that I don't like targets, they never seem to pan out). The only argument I have is that in 2014 the NYSE (along with the rest of New York) may be a smoking hole. How's that for bearishness?

I will have the new highs update in a couple of hours.

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