Friday, 18 May 2012

Time for a bounce in S&P....

 S&P is now in dangerous territory. Moving much lower than 1300 will give rise to concerns as to whether the move from 1422 is corrective or a new impulsive move. Bearish stops look confident all the way down. The bullish scenario sees the index in the final stages of finishing a 5th extended wave of corrective wave C from 1415. The bearish scenario sees the index in its 3rd impulsive wave down. For bullish scenario to remain in play, S&P cash should make a bounce to at least 1366. First sign of such a bounce is to see the index hourly close above 1325. Bears could expect a bounce to those levels as part of a 4th wave.
Personnally my 1340-1310 targets have been achieved and I'm out of all my short positions although there is good chance we see below 1300 the next week. I may try to sell again around 1315-20 with  stops close by, but I want also to be ready to go long any time. As I say all the time, the market may move upwards and it is essential to do it in an impulsive way in order for the rise to be sustainable. These levels might mark a very important intermediate term bottom as a 4th wave and the start of a new upward wave. Concluding, trend remains down and may be ending this decline soon. Be alert for any reverse signals.

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