SPX after having completed 5 waves up at Friday's open, prices pulled back sharply as expected in our last analysis. Whether bullish or bearish, a pull back was expected. Moreover, the index could not manage to break and stay above our middle pitchfork resistance. That is an important level (1432) for bears now, as a move above it could accelerate prices towards 1445-47. Next target that needs to be broken by the bears is 1404 area. A break below that level could accelerate prices towards 1380-90.
Watching the daily chart, we observe that prices remain outside the upward sloping channel and Friday's open made a back test of the broken channel. Such behaviour could be a sign that a move towards the 200 EMA(1374) is very possible to happen. The sequence of lower highs and lower lows in the daily chart is also a bearish sign that prices could fall further.
Last chart today to watch out over the longer term is the crossing signal of my two EMA indicators as a bearish sign of further price weakness. Usually prices decline considerably after such a signal. This crossing combined with a break of 1400 level could confirm that bears have taken over.
US election talk on how the market is going to react to it leave me uninterested. I feel it is very possible wahtever outcome, that prices could fall further continuing their recent trend. Many believe that an Obama win could be bullish for the stocks while the opposite will happen if Romney wins. Any reaction like that I believe it wll be shortlived. I prefer to ignore the noise and just wait for prices to speak for themselves.
Always keep in mind the important support and resistance levels given in our charts. Thank you for taking the time to read my new post.
Hi Alex. Thanks for posting your thoughts, I always appreciate them. I agree with you 100% about the idea that the results of the election don't matter one iota. That's all media hype and spin and has nothing whatsoever to do with the credit crisis all over the world. The markets are going to do what they were intending to do before the election.
ReplyDeleteI hope you have a great week!
AR