Sunday, 16 September 2012

Can S&P go higher?

After such a noteworthy and extremely volatile week, now that the QE3 hype has passed, will the rise in S&P continue or has the market discounted this monetary action by the FED into prices already. In one word.....yes....the market can still go higher. The downward move on Friday from 1474 to 1461 is clearly corrective due to the overlapping pattern of the movement. It is most probable that a new high towards 1480-90 will be made as the final wave of the move that started from 1396.56 low. Resistance at 1468 if broken will give power to the market to make a new high. The market is moving downwards in the blue channel and needs to break out of it to start the final upward move.

In the chart above you can see my count from 1396.56. I feel that it is suitable for the 5th wave to be counted as an extension. There are other alternative counts that are much more bullish, but I suspect that the QE3 effect will have to fade out a bit and the market to make a correction towards 1440-50 after the expected new high. Long positions at this point should be protected against a sharp pull back. I don't think the pull back will change the whole upward trend, but it will give bears something to expect and be happy about. Concluding, we are still bullish biased with short term target towards 1480 but also have to be cautious for any pull back towards 1440-50. 

Thank you for taking the time to read my thoughts.

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