Tuesday, January 4, 2011

Ten points swing

Pretty much a flat day but not without a little bit of drama, with SPX rising 2 points at open then dropping 10 points just to recover almost everything by the close. Price moved a little bit bellow EMA25 but did close 4 points above this MA. Please note that price didn't touch SMA 120 since the beginning of the new leg, more than a month ago. Price was not even close to SMA 120 during this period, it was also at 15-30 points above SMA 120. This is not unusual on the first weeks after a new leg starts but is hard for me to consider the leg started on December 1st as a new leg, the rally actually begun in September and had a minor correction in between. In other words market seems overbought to me at least on short term time frame.

I think we should watch two very important levels, the support around 1253 (SMA 120) and the resistance around 1320-1350. I won't be surprised if market rallies to 1320-1350 in the next few weeks but after that it's hard to imagine another powerful leg up without a correction in between. 


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