Teetering .....

Yesterday’s price action was almost a mirror image of Tuesday’s. Although it closed higher Tuesday is technically a “downtrending” day; and, while yesterday closed sharply lower it is technically an “uptrending” day! The determined selling brought the cash S&P500 back down to the weekly “support” line shown in bright green on the chart. Fail to hold the March low and we may quickly see the next support level at 1245-49.

As we go into the holiday weekend I think that a bullish view is only warranted on a break above 1304.67 today (this is where today’s resistance line falls). Another negative or slightly bullish day today could cause the RSI index to become severely oversold – which is not bullish. More on this if conditions warrant.

What worries me is if we break the March low. My timing work; which I (on purpose) don’t write about much, will view such a break as a very negative event for the future of equity prices over the coming months.

The Good and the Bad

Sometimes you just have to laugh out loud. I have been expecting the March low in the cash S&P500 index to hold, but this is ridiculous. Is it possible to hold by just a whisker? Yesterday’s low of 1260.68 was just 3.7 points higher than the March low water mark. Are we out of the woods?
The good: Yesterday’s low respected the weekly “support” line shown in bright green on the chart. (Aside: other support levels remain the same – see chart.)

The bad: Price action has yet to generate a technical “buy” signal on the indicators I routinely watch.

The practical: A bullish view is only warranted on a break above 1309.83 (this is where today’s resistance line falls). On the flip side, I don’t think a bearish view is appropriate through (at least) the remainder of this trading week.

Bears to Attack the March Lows?

Welcome to a new month and quarter. The last day of the old month/quarter saw the cash S&P500 index stabilize with an uptrending day. Our hypothetical stop point was hit at 1287.89.

Now what? As I write and ponder this morning the markets are crumbling in Europe and the futures on the U.S. market are down sharply. The cash S&P500 may be testing its March lows (and my forecast for them to hold) very quickly!

The only way my analysis would allow a long position would be on a break above 1314.99 (this is where today’s resistance line falls); and that looks unlikely to happen today!

Another aspect of the analysis to consider is the weekly “Support” Line which I have added to today’s chart. It is the bright green line running across the chart from March’s low. It sits at 1262.66 today, marking a support zone with the Fibonacci line at 1268. If that area can’t hold the next support cluster is just under the previous lows at 1248-1258. Let’s see if we can hold the March lows.