Thursday, 18 February 2016

S&P 500 rallies from weekly chart trend line supports toward daily chart resistance

Weekly chart shows the S&P all sessions has rallied from dual trend line support.



Next chart zooms in on the weekly for clarity. Note last week's long tail, and the size of the market rallies which followed other long tails. If history repeats or even just echoes, the current rally should have further to go.



Daily chart shows that the market is approaching potential resistance. Briefly putting my trading hat on now.... I find it useful to map out expected action on a trade, and if the trade doesn't follow my script I aggressively tighten my stops. My script for remaining short term bullish the S&P demands continued strong rally. If the market does not push quickly through the illustrated daily chart resistances, I will aggressively tighten my stops and be prepared to turn bearish. I think another test of the weekly chart trend lines would likely result in a downside break.... right now I don't expect that, but it's best to be prepared for every possibility.


4 comments:

  1. Hi Avid. The markets had a nice bounce during the week however I fear it may be short lived. The momentum oscillators I look at are currently very bearish with several major indices looking very similar to when they did during late-2000 and late-2007 before they fell more than 50% from their peaks.

    ST S&P500 target is 1600 at about the 38.2%Fib retracement by mid-year. Longer term it's 450-500 projected by late-2017/early-2018.

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  2. http://hotcopper.com.au/threads/weekend-charting-and-chat-19th-february-2016.2705603/page-5?post_id=17072624#.VsfjMfl95nI

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    Replies
    1. Could you email me your chart? I am not signed up to Hot Copper and therefore can't view it.

      You may prove to be right, but the market needs to get below the weekly chart trend line supports that I illustrated before it is possible, never mind probable.

      One thing I have noticed about momentum many times over the years, on long term and short term charts, is that if momentum makes a stronger move than price, a lot of energy has been spent in the move, and it usually reverses very strongly. That is what I see now in the S&P.... big bearish momentum in to the lows, but price lagged momentum. Though I'd like to see your chart to find out if you're seeing something different.

      Thanks.

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