Wednesday, August 25, 2010

Bounce up from 1040

Let's not make a big deal about the 3 points up today on SPX but the bounce up from 1040 gives bulls the last bit of hope. Bellow 1040 is going to be really bad since there is no real level of support out there, at least not in the last 3 months.

The downtrend line is around 1068 and is going to climb down to roughly 1065 by the end of tomorrow's trading day. That means SPX can gain another 10 points without affecting the bearish momentum by a bit. There is no positive divergence in either MACD or EW histograms so no early indication that market is going to turn around.

On long term let's keep an eye on EMA100 crossing EMA200 that signaled the beginning of the bear market in 2007. We are not there yet but very close. Intermediate term players should watch EMAs crossing on hourly chart. I hope you went short around 1090-1100 and stay now comfortable on gains.

Let's see how the jobs data are going to look tomorrow. On Friday, I think, the revised GDP data will hit the market. Even if there isn't going to be any surprise expect market to go down a little bit so if we are going to have another up day this week is probably going to be tomorrow.

Have a nice evening!



  1. Hi Babaro. On Friday, we also get to hear from Berspankme about the Fed's Plan C (or is it D?) to save the world. Personally, I think that has much to do with the market's shrugging off horrible home sales and durable goods reports.

  2. Hi Babaro.

    IWM is forming a nice (normally) bullish falling wedge, with Wednesday's bullish close right at trendline resistance.

    It should be interesting close to the week, I trade IWM options and it's leveraged short/long equivalents frequently. If the Thursday jobs number "surprisingly" disappoints, along with the weak GDP revision on Friday I think we could go another leg down and actually probe SPX 1040-1020. If numbers come in crappy, but as expected, and/or Chopper Ben hints at some more QE crack on Friday, I think we could actually rally further to close the week around the magical 1070-1080 range, which should provide another opportunity to short.

    Beyond this marginally oversold condition, the trends (and the macro-economic condition in general) remain solidly bearish IMO.

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