Thursday, July 8, 2010

Bulls win the day

Today was bulls' turn to scare the pants out of the bears. Bears are still in control on long time frames but they should be very cautious here since some important technical levels were blown away today.  The most important level is around 1050, the February-July resistance line, or (if you prefer) the neckline of the "head and shoulders" people are talking about. Weekly charts place the neckline around 1060 so I would say there is a whole resistance area (1045-1060) we should keep an eye on.

Bulls' main job here is to keep SPX above 1045-1050. The major danger comes from 1078 level where  SPX is going to meet the second downtrend line. If SPX bumps into the downtrend line then moves heavily down we are probably going to see lower lows, bellow 1020. But let's not anticipate, better react to the market moves. Right now, on short run bulls seem to be in control and this is evident from the fact that DMI on 60 minutes chart has finally turned green.


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