Today's chart is an updated version of a previous post. We take a look at some warning signs that a top has been made at 1474 and what to watch out for. As mentioned before and noted on the chart, each market rally from March 2009 has been smaller than the previous one. That could be a sign of weakness. Bulls are losing their momentum and power to keep the market rising for longer time and higher prices. The decline might not yet look impulsive, that is why we favour the scenario that we are still correcting the 1397-1474 move. If however support levels are broken, we could probably be starting a larger degree correction. The 1406 price level should hold on a weekly basis in order for bulls to still be in charge. If that level is broken, bears will take control and most probably lead prices towards 1300. The weekly close low of 1278 if broken, will signal the end of the continuation of higher highs and higher lows. Concluding we expect the market to trend again after or near the US election date. We give more chances to an upward move towards 1550 specially if prices don't fall below 1406. However we must also keep in mind the possibility that the trend changed to down after the 1474 top. This scenario will increase its chances if support at 1407 is broken and if impulsive downward waves are seen.
For more detailed analysis on S&P we will update soon. Thank you for taking the time to read my thoughts.
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