Friday, August 20, 2010

Good news and bad news

1070 tested for the third time and once again SPX resisted. However, the week ended in red. I said last week that my gut feelings are that we may see a bounce from 1070 but we are not going to go above the resistance level around 1100. My "prophecy" was fulfilled (LOL) but I did expect a bounce a little bit higher, in the 80's.

We definitely have a downtrend line that is now around 1085 and is going to be around 1082 on Monday (visual estimates). This mean we may see a bounce up towards the downtrend line then a move further back. We may cross the downtrend line, it all depends on the housing data that are going to be releases next week.

What to expect next? The more a level is tested the more significant is the break out. If 1070 fails we may see a very rapid move on the downside. The good news (for bulls) is that 1040-1060 may also prove to be a decent support level. We do have a pretty solid support/resistance line in the 1060-1065 area on weekly chart and an obvious support/resistance in the 1040-1050 zone. Bellow 1040 is going to be a disaster since there is nothing to prevent bears to push SPX to new lows.

Let's see what the coming week is going to brings and let's adjust our trading strategies accordingly. My main timing strategy, EMA25 crossing EMA50 on hourly chart already gave a "sell" signal around 1100. Acting every time I see these EMAs crossing saved me a lot of pain in the past and made me some money even during this terrible range trading we are witnessing in the last three months. If you want to buy closer to the bottom and sell closer to the top you may look at these EMAs crossing on 30 minutes chart. At the same time you will have more false "buy" or "sell" signals. It all depends on your trading style. For very adventurous traders I try to post every morning the best trading candidates. For players with intermediate risk tolerance I am doing these daily analysis. Conservative players should stay out of this market.

Have a nice trading week!



  1. In the last we crossed 1070 widely.
    Monday wecan bounce or sink much depends on EU datas.
    The trend for the next week rests very bearish because of postive close of day and week of Nasdaq that give strength to bear.Next week will be widely negative.
    9999 within next week and 999 within 2-3 weeks.A new bear wave is just started.All new absolute lows within 15-19 months around 450-400.

  2. Your scenario is possible but I personally prefer to have a shorter time frame in mind so I can take advantage of any significant wave up or down.


Thank you for your feed-back