S&P500 Breaks Out of Intraday Descending Channel - unitedfinancialplanner.com

The S&P500 just broke out of its intra-day 15 minute chart descending channel.

The faster moving averages also crossed and are pointing upward.

This may be a short term move - so keep tight stops.

Remember, the current bias of the market is still downward.

Technical Analysis of the Market - August 22 2011 unitedfinancialplanner.com

Today was a small up day for three major US Stock Market indexes.

The upward movement did not break out of the intra-day 15 minute chart of the SPY.

It looks like we may come closer to testing the recent lows.

Need to see the SPY break out on the upside by coming out of the descending channel.  A breakout to the downside would require the S&P to make a new low.

Lets see what this week brings.  Share your thoughts.

Technical Analysis S&P500 August 22 2011 unitedfinancialplanner.com

The recent chart action on the S&P500 is very similar to the chart action on the weekly chart back in 2008.

The similarities include:

• Come off a a reasonably long bull run
• Penetrated the 200 day moving average
• Action on above average volume

The lessons we should learn from 2008 is:

• Market traded in a horizontal channel for about 2 months before going lower
• Never penetrated the 50 DMA while in the channel
• The price drop after going below the horizontal channel was much larger than the one that brought us to the channel.

Looking at the monthly chart of the S&P500 we can learn more:

• The drop in 2008 took us back to where the S&P started the bull run in 2003
• The bull run started in April 2003 at $84 and topped in October 2007, four and a half year and, at $152 - almost doubling.
• The bull market ended in April of 2009 - one and a half years to wipe out 4 1/2 years gains.

On a positive note

• we are currently above the 200 DMA and it could provide some much needed resistance.
• If we resist the 200 DMA on the monthly chart, we could be off the the races on the upside.
• In 2008 we already had the lower moving averages sloping downward.  Currently the three moving average are in bull order.  The slower on the bottom of the stack and the slower on the top.

The index is truly at a tipping point.  Strictly looking at the charts one would have to conclude that we have some downside left to come.

The channel in 2008 traded between $125 and $143, a 14% move.  Currently we don’t a clear channel defined yet.  The recent lows of 110 on the S&P  have seem to hold.  So this may be our bottom for the time being.

The current state of the index as show in the 15 minute chart would indicate that the recent low of August 9 is still in place but could be challenged.  A sniping short term buying opportunity may occur when the index moves above the descending channel and/or the intraday moving average cross and move up.

Lets see what this week brings.  Share your comments.

Market Direction - Reversal Likely - July 8 2011

The major indexes all opened down at the open in response to the poor jobs report.

Technically, the indexes are setting up for possibly 3 options as far as candlesticks go.

 The first option is to maintain the current lows or go lower and this would indicate a short term reversal.

The second option would be that the bulls fight back and at the end of the day close higher.  After eights days up and today being a Friday, chances are not strong that this could happen.

The third option is that the bulls fight back but still end up closing lower.  This candlestick would look like a hammer and is a bearish indicator.

S&P 500 - Possible Candlestick Evening Star

The S&P 500 (SSO 200% of SP 500 ETF) created an up gap on opening and held the gap breaking through a week resistance of of 1350 on the S&P.

It was also the eighth day of a strong bull run.

Yesterday candlestick formation could be defined as a Evening Star.  The previous day was up and yesterday’s candle bottle was higher than the prior and the body was small.  Could indicate a reversal is ahead.  If today opens below the middle of yesterdays body, we could have a confirmed evening star candlestick pattern and be in a short term reversal. 

At this time, the longer term trend is still up.  Looking forward, you could argue that if we top here and go down, we may have a heads and shoulders formation forming.

Lets see what happens today.  The jobs report this morning will play a big role in overall ecomomic confidence.

S&P500 - Bearish Engulfing Candlestick - July 6 2100

The S&P 500 candlestick pattern for July 6, 2100 was close to a bearish engulfing pattern.  The previous close was red and the 6th was opposite color (green).  The things that are missing for a engulfing pattern is that two days prior was not red and the close on the 6th was not higher than the prior day close.

Yesterday’s candlestick could be label as an inside day, which means a pause in the current trend.  The odds are that the current upward trend will continue.

Both of these options would indicate that this current upward trend is likely to continue. 

We have jobs report today and tomorrow and since jobs are the inhibitor of our economy, any new can quickly effect the markets.

S&P 500 Long Term Uptrend - Short Term Breather

The SSO (Ultra Long SPY ETF and a proxy for the S&P500) took a break yesterday and finished with an inside doji close.  Very little movement and low volume.

The futures this morning point to a downturn on the opening bell.

The upside short term resistance on the S&P 500 is 1,345.  The downside support is 1,321.  The downside support is both the upper channel and the 50 day moving average.

Lets see what happens today.  Share your thoughts.

S&P 500 Resists 200 Moving Average and is Now in Short and Long Term Uptrend

The SPY (proxy for the S&P 500) recently confronted quite a few technical opportunities and in each case, indicated that the index wants to go higher.

First technical challenge was the prior low set in March as 125.  Recent action took the index to the low but did not penetrate thus creating a double bottom.  This is a short term bullish indicator.

Secondly, the index broke out of a falling wedge to the upside with conviction serving as a short term bullish indicator.  The next resistance is 134.9 set in June.  It would be normal for this breakout to test the falling wedge upper channel.  If it resists and goes up again we could be off to the races.

Lastly, and the most important to the long term trend, the index price and 21 and 50 day moving averages resisted off the 200 day moving average and have now turned up without penetrating.  The is a strong bullish long term indicator.

Next step is to get the shortest term moving average (21 day) to cross the slower average (50 day) and we will then have all the moving averages in their rightful place and in an upward trend.

You can play the S&P500 with a 1:1 etf like SPY or a leverage 1:3 etf like SSO.  The 1:3 SSO will provide a 300% return on what the S&P500 does.

Please share your comments with us.

S&P 500 - DOJI close on March 17, 2011

The ETF SPY (proxy for the S&P500) has a DOJI close yesterday.  This normally indicates a lack of direction or indecision.  It was also an “inside day” in that the highs and lows were within the range of highs and lows of yesterdays trading.  This would also indicate a reduction in stock market volatility (VIX).

Moving Average

Moving averages are used to emphasize the direction of a trend and to smooth out price and volume fluctuations, or “noise”, that can confuse interpretation. Typically, upward momentum is confirmed when a short-term average (e.g.15-day) crosses above a longer-term average (e.g. 50-day). Downward momentum is confirmed when a short-term average crosses below a long-term average.