Monday, July 19, 2010

Around the downtrend line

SPX moved slightly above the daily downtrend line but keeping in mind these are visual estimates let's consider the index AT the downtrend line, neither above nor bellow. Neither this move nor the one on Friday were unexpected, although Friday drop was a little bit more than I anticipated. The first scenario I laid out last week, SPX goings towards the downtrend line then index bounce up is back in business. What is encouraging for bulls is that DMI on 60 minutes chart is rather neutral than negative after today's 7 points up.

Nobody seem to be extremelly confident here, neither bulls nor bears. Practically the market didn't move since May 24, a huge volume in the 1067-1105 area and two brief escapes to 1022 and 1120. Bears have the advantage of SPX trading bellow SMA200 but bulls made some good progress lately, most notably climbing above the downtrend line last week and even more important daily DMI briefly turned positive. Very hard to call this market on long(er) term.


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