Critical levels

To continue with the  previous post in which we measure the SPX in euro, we notice the critical resistance reached.

In the previous post on the S & P 500, we highlighted a down trend-line that was acting as a resistance. But this red down trend-line have been broken. Then, I think 1222 in S & P are possible, but respecting the trend-line from 1962 (green dotted line). The green trend line cross 1222 in October 2010.

Quarterly chart S & P 500:

S & P 500: 1222 possible?

This is one of the "road-maps" that I am following. It is possible?. Looking the previous posts, I think is something to be aware. I am not going short. The uptrend looks steady.


I think we can not go against the trend despite the apparent fallacy of the bull market.

I have been reading and listening a lot of reasons for the market to crash since Abril 2009. But the market does not listen to them. Then, I think them should listen to the market.

The fiscal tightening of China could be interpreted like something positive for the market, because it means that the economy is growing more than expected (!!!)

The systemic risk and the possibility of radical and political changes is something that were present in 2009 (and the market went UP UP UP).

Then, from the fundamentals, I think there is room for growth.

S & P 500 in euro: the soft bearish side

Some people ask me why to look the S & P in euro. I think looking S&P in euro you can eliminate the effect in the charts caused by the depreciation/appreciation of the currency. I am from Argentina, and when Argentina depreciated its currency (the 'peso") in 2002, the financial markets went up because of the depreciation effect. Then, in USA, the depreciation/appreciation of the US dollar is something that have a big impact in the SP500. Looking the SP500 in euro you change the US dollar fluctuation by the euro fluctuation, and then you have another valid and original view of the index. You can find for example which % of the ups and downs (or broken resistances / supports too) are caused by the currency fluctuation, additional targets, etc.

This chart does not looks bearish, but the target of the inverted head and shoulders have been reached.

S & P 500 in US euros: bullish signs

Notice the bullish divergence in the slow stochastics. In addition, the EMA's are still pointing up and the trendline is intact. I am not bearish. 

S & P 500 in US dollars: supports and MA's

DOW JONES, S & P 500, DOW TRANSPORTS & other key financial indexes trend lines & fibonacci's

DOW JONES INDUSTRIAL (weekly chart) -  Key trend line:

SPY (S & P 500) (weekly chart) -  Key trend line:

NASDAQ COMPOSITE (monthly chart) -  Key trend line:

DOW JONES TRANSPORTS (weekly chart) -  Key trend line:

DOW JONES US FINANCIAL INDEX (weekly chart) -  Key trend lines:

IWM iShares Russel 2000 ETF (weekly chart) -  Key trend lines:

IYR - DOW JONES REAL STATE iShares ETF (weekly chart) -  Key trend lines:

                              

To learn more on trendlines:

Stock charts trendlines (school)

Exact Fibonacci's confluence at DOW JONES

We have a double confluence fibonacci's resistance in the DOW (both monthly and weekly charts).

Look at the 38.2% Fibonacci's resistance in the monthly chart (9.410 points), 20 years period, from 1989 to 2009.



Then, look the the 38.2% Fibonacci's resistance in the weekly chart (9.409 points, this chart is from the August 10 week), October 2007, September 2009. Link to the previous post (some additional charts)



Both coincides in the 9.410 level.

If we look at the technicals indicators, we can expect that the rally resumes, since they are very bullish, on both, weekly and monthly charts. But it will not be easy to overcome. Tight your stops!

2002 megaphone and currently short term supports

Big sell-off with a huge gap down today (which we could expect to be filled by the bulls) and the VIX almost 15% up. This bring back to my memory this 2002 chart, with a similar chart pattern that is developing today (the famous "megaphone", almost so famous like the failed H & S)

Anyway, it is something interesting to remember:


This are the key levels supports and objectives in the short term (established in the previous posts) that I am following:

Dow Jones US financial Index: key support at 232 (23.6% fibonacci). Today's close: 241.02. But, the XLF is developing a pennant?:


Dow Jones Real State ETF (IYR): it broke the key support at 38.5. Today's close: 37.52. Next support: 35.

Dow Jones Industrial: key support at 8.960. Today's close: 9.135.

Dow Jones Transport: key support at 3.420 (38.2% Fibonacci). Today's close: 3.576.

Nasdaq Composite: Huge gap and very close to resolve (or not) the rising wedge:


UUP: it can not break the downward channel. But it looks like it will keep trying:


10 year US treasury Bond yield:

For the first time in the last 9 months, it broke the uptrend channel.


SPY: some people could see a Head & shoulder, which obejctive is 97:

Some charts: Dow Jones Ind., Dow Transports & Nasdaq

I try with some Pitchfork's charts and Fibo's. Here, some interesting findings (especially the coincidence in the objectives of the elliot wave counts and the pitchfork's resistances)

Dow Jones Industrial:


Dow Jones Transport:


Nasdaq Composite:

Two different patterns in the S & P 500

Which one is the right? A rising wedge, which is not confirmed, or the head and shoulders, which could be confirmed since the breakout of 950 (but I do not see huge volume)?

In the begining of the correction?

Continuing with the post "DOW: Green Monday?", now I think a correction is very likely. Not necessarily tomorrow, because we need some confirmations, but the process is in development. We have some sell signals.

In the short term:

First, look at the UUP (BULL US Dollar index ETF). If we look at the moving averages that I use to track trend (when the 22 EMA cross the 100 SMA in the 15 minutes frequency chart, and is confirmed by the price, we have a signal), they are showing a change in trend. In addition, we can notice the bullish divergences. This does not mean that the indexes are going to fall from here, but they could begin to move sideways. This is not good for commodities and latin-american indexes.




Then, we have the BUY signal in the VIX. It is the same signal as the one in the UUP. Look that the charts, they are very similar.


This scenario is right, if we suppose that the markets are going to maintain the negative correlation with the dollar that they had until today.

Finally, if we look at the indexes, it is interesting to notice that we do not have a sell signal yet. Then, It is early to short the market (in my humble opinion). We need a confirmation in the SPY.


Gaining more perspective, here some daily charts:

SPY:



UUP:



QQQQ:


DOW JONES TRANSPORT:




Ticker sense: (bullish)

http://tickersense.typepad.com/.a/6a00d8341c924353ef0115723ba8d7970b-popup

In my opinion, we should look at the 950 level in the S & P 500. This is the key support.