If we fail to break the previous high and stay above it, we may see a move down from there!I will look to the next couple of days to see how the market trades.
Showing posts with label SP500. Show all posts
Showing posts with label SP500. Show all posts
Wednesday, October 7, 2009
October 7 - Market Commentary
I've been watching the markets the past week and trying to figure out at which level the pull back will be exhasted and the rally will resume. It seems that we've bounced off the 50-day moving average quite nicely. However, on a technical basis I don't think we're out of the woods. The S&P500 made a top near the 23rd of October and since then we've made a lower top on the 29th. This bounce from the 50-day moving average has yet to strongly break above the 1065 level before we go back to rally mode.
If we fail to break the previous high and stay above it, we may see a move down from there!
I will look to the next couple of days to see how the market trades.
If we fail to break the previous high and stay above it, we may see a move down from there!I will look to the next couple of days to see how the market trades.
Friday, July 31, 2009
July 31 - SP500 Commentary
I haven't posted in a while as I've been away on vacation. I'm glad I was on the sidelines as the position I had in mind would have been short the S&P.
However, the S&P has soared in the past weeks to 2009 all time highs as the market has been excited by good news and brushed bad news aside. Market sentiment now is that a bottom has been set and many are convinced (not without merit) that downside risk from here is known and measurable. So with optimism people have been coming in on dips in the market and these people will hold their positions through a downturn as their entry prices are low.
Let's take a look at the S&P500 with support lines:
The support lines at 875 have been very strong, and the 950 resistance proved to be minor in the recent rally. For my position, I would not get in at this point as I don't want to chase the market in a rally. I would look for a retest of the 950 level to see where it can go. I will look to get in if support is strong at that level.
I also post a chart of the S&P500 with Bollinger Band channels to show that even with the recent rally, we are within the volatility channels and there could still be upside from here.
I will look to post more commentaries in the coming week...
However, the S&P has soared in the past weeks to 2009 all time highs as the market has been excited by good news and brushed bad news aside. Market sentiment now is that a bottom has been set and many are convinced (not without merit) that downside risk from here is known and measurable. So with optimism people have been coming in on dips in the market and these people will hold their positions through a downturn as their entry prices are low.
Let's take a look at the S&P500 with support lines:
The support lines at 875 have been very strong, and the 950 resistance proved to be minor in the recent rally. For my position, I would not get in at this point as I don't want to chase the market in a rally. I would look for a retest of the 950 level to see where it can go. I will look to get in if support is strong at that level.
I also post a chart of the S&P500 with Bollinger Band channels to show that even with the recent rally, we are within the volatility channels and there could still be upside from here.
I will look to post more commentaries in the coming week...
Monday, July 20, 2009
July 20 - SP update
Over the past week we've seen a sharp rebound off the 875 support level on average volume. Currently we're trading in a tight range between the 875 support and 950 resistance.
The market had been waiting to see what happens to CIT and this morning the news came out that CIT will be rescued. The S&P500 is already up in pre-market trading, but let's see how the day goes....
Volume is average, I would have expected an increase in volume. MACD is bullish as the moving averages have crossed to the upside. More will be revealed during the week.
The market had been waiting to see what happens to CIT and this morning the news came out that CIT will be rescued. The S&P500 is already up in pre-market trading, but let's see how the day goes....
Volume is average, I would have expected an increase in volume. MACD is bullish as the moving averages have crossed to the upside. More will be revealed during the week.
Monday, July 13, 2009
July 13, 2009 - SP500 at Critical Point
In the past 2 weeks we've seen some weakness in the S&P500 as it slid below its 50 day moving average, and it's hugging the 200day moving average down!
At the 875 level we have some support as it has been local support and a previous resistance level going back to February.
I am concerned that this support may not hold, as volume keeps declining. I think some big money has come into the market since the March lows, and since these new entrants got in at all time lows, they will be looking to hold through this downturn, if not too severe.
This week is option expiry and more earnings are coming out. Let's see how the week plays out...
At the 875 level we have some support as it has been local support and a previous resistance level going back to February.
I am concerned that this support may not hold, as volume keeps declining. I think some big money has come into the market since the March lows, and since these new entrants got in at all time lows, they will be looking to hold through this downturn, if not too severe.
This week is option expiry and more earnings are coming out. Let's see how the week plays out...
Monday, July 6, 2009
July 6, 2009 - SP500 Bearish Head and Shoulder Pattern
This will be a quick update on the S&P500... there is a bearish head & shoulders pattern that has formed here. We tried to take out the 950 level, but were unsuccessful and couldn't come back to retest. The 50 day moving average is broken to the downside and a test of the 200 day moving average, which coincides with the local support level at 880, will tell more of the state of the market.
There are volume and MACD divergences which further indicate the bulls are running out of buying power and the bears are becoming stronger.
Let's begin the trading week....
There are volume and MACD divergences which further indicate the bulls are running out of buying power and the bears are becoming stronger.
Let's begin the trading week....
Monday, June 29, 2009
June 29, 2009 - SP500 - Place Your Bets
Well we've had an interesting week. Following the post on June 23rd, bulls lost steam at the 950 level and the S&P500 fell - but to a very strong convergence of the 50day and 200day moving averages. There was support at these levels as we bounced off 890, however, not on the volume that I would have liked to see.
Volume is below average and even though the MACD has ticked up, it is still in a bearish pattern.
Now, let's take a look at a daily chart for SPY, which is the ETF that tracks the S&P500 on a one-to-one (non-leveraged) basis. The chart of SPY clearly shows the same price movements as the S&P500 and the 50day and 200day moving averages converge at the right side of the chart. (click on the chart for a larger view)
At the bottom portion of the chart the Call and Put option volumes are plotted. Notice anything interesting at the right side?
A very distinct spike is visible right before the place of convergence of the averages. A vertical line has been drawn to align the top of the call volume spike with that of the price chart.
At this point a lot of call options are exchanging hands. Buyers of the Calls are betting that the S&P500 will bounce off the averages and the sellers are taking the reverse side. The wheel spins... but who's placing these bets? Which side are the pros taking and which side are the sheep on?
Option volume is another important technical indicators that signals market sentiment and possible shifts. Even though volume alone does not tell us which way the tide will go, it does tell us that the market is taking sides and that there is a tide coming.......
Volume is below average and even though the MACD has ticked up, it is still in a bearish pattern.
Now, let's take a look at a daily chart for SPY, which is the ETF that tracks the S&P500 on a one-to-one (non-leveraged) basis. The chart of SPY clearly shows the same price movements as the S&P500 and the 50day and 200day moving averages converge at the right side of the chart. (click on the chart for a larger view)
At the bottom portion of the chart the Call and Put option volumes are plotted. Notice anything interesting at the right side?
A very distinct spike is visible right before the place of convergence of the averages. A vertical line has been drawn to align the top of the call volume spike with that of the price chart.
At this point a lot of call options are exchanging hands. Buyers of the Calls are betting that the S&P500 will bounce off the averages and the sellers are taking the reverse side. The wheel spins... but who's placing these bets? Which side are the pros taking and which side are the sheep on?
Option volume is another important technical indicators that signals market sentiment and possible shifts. Even though volume alone does not tell us which way the tide will go, it does tell us that the market is taking sides and that there is a tide coming.......
Tuesday, June 23, 2009
June 23, 2009 - SP500 Moment of Truth
On June 13th, I posted the S&P500 Technicals , indicating that the bulls may be running out of steam as the resistance builds around 950 levels. The MACD had also turned bearish.
In the past couple of days we've had some down days, including yesterday which resulted in a 3% drop in the S&P500. The daily percentage drop had not exceeded the 3% line in the recent weeks.
We are at a very important technical point. The 50 day and 200 day moving averages are very important to traders as indicators of resistance or support. And now they have converged at the 900 level, which is also a psychologically significant number.
Yesterday we crossed both moving averages to the downside and closed below 900, while the MACD remained bearish. Today I was looking for some support in the morning, but it was very short-lived and did not produce a significant gain. Movement was in a tight range, but we still closed below the moving averages.
The next few days will be a good indication of the state of the market. If we break the two averages without significant support then we could go a lot lower from here. The next support line may be as low as the 800 levels. If we do see support, I would like to see what happens as we approach 950 again. Resistance seems strong.
In the past couple of days we've had some down days, including yesterday which resulted in a 3% drop in the S&P500. The daily percentage drop had not exceeded the 3% line in the recent weeks.
We are at a very important technical point. The 50 day and 200 day moving averages are very important to traders as indicators of resistance or support. And now they have converged at the 900 level, which is also a psychologically significant number.
Yesterday we crossed both moving averages to the downside and closed below 900, while the MACD remained bearish. Today I was looking for some support in the morning, but it was very short-lived and did not produce a significant gain. Movement was in a tight range, but we still closed below the moving averages.
The next few days will be a good indication of the state of the market. If we break the two averages without significant support then we could go a lot lower from here. The next support line may be as low as the 800 levels. If we do see support, I would like to see what happens as we approach 950 again. Resistance seems strong.
Saturday, June 13, 2009
June 13, 2009 - SP500 technicals
The S&P500 has, unbelievably, rallied over 40% since the March lows. This rally which started as a sharp 'V' shape rebound off the low has slowed to a more sustainable uptrend. The line drawn below serves as a loose support line in this uptrend.
There are many people who missed this uptrend and have been waiting for a downtrend to buy-in. The hopes for a much anticipated "buy-in" downturn dissipates everyday as the S&P rallies to new 2009 highs.
Why such a rally? Well, the "this-is-the-end-of-capitalism" fears have subsided and cautious optimism has return to the market, supported by better than expected economic stats. BUT is everything better? Have all the problems gone away? or is this the media at play?!
Let's look at the technical:
If the uptrend line is extended all the way to the right side of the chart, the price is still above it indicating the continuation of the rally. However, there are technical signs that the bulls may be running out of steam here. Looking at the recent price action, the S&P is moving in a very tight range, with lower than average volume - unable to penetrate the 950 level and close above it. The declining trend in MACD while the price traces new highs is a bearish sign, and a technical sign that bulls are losing power at these levels.
However, these are not signs that we're going to crash from here. There are 3 support lines: firstly, the support of trend line at around 925, then the 50day SMA at 911, and the 200day SMA at around 890. The 50day and 200day moving averages are very meaningful to traders, and have to be broken to the downside before another big down wave.
This week is option expiry week, let's see how it goes.....
There are many people who missed this uptrend and have been waiting for a downtrend to buy-in. The hopes for a much anticipated "buy-in" downturn dissipates everyday as the S&P rallies to new 2009 highs.
Why such a rally? Well, the "this-is-the-end-of-capitalism" fears have subsided and cautious optimism has return to the market, supported by better than expected economic stats. BUT is everything better? Have all the problems gone away? or is this the media at play?!
Let's look at the technical:
If the uptrend line is extended all the way to the right side of the chart, the price is still above it indicating the continuation of the rally. However, there are technical signs that the bulls may be running out of steam here. Looking at the recent price action, the S&P is moving in a very tight range, with lower than average volume - unable to penetrate the 950 level and close above it. The declining trend in MACD while the price traces new highs is a bearish sign, and a technical sign that bulls are losing power at these levels.
However, these are not signs that we're going to crash from here. There are 3 support lines: firstly, the support of trend line at around 925, then the 50day SMA at 911, and the 200day SMA at around 890. The 50day and 200day moving averages are very meaningful to traders, and have to be broken to the downside before another big down wave.
This week is option expiry week, let's see how it goes.....
Monday, June 1, 2009
June 1, 2009 - S&P500 technical analysis
It has been an incredible rally for the S&P500. With all the sceptisism and bad economic news, the fear has subsided and money is starting to flow back into the equity markets.
After a well supported rally to the upside a double bottom has formed on the S&P500 near the 880 level.
The following days will serve as an important test for the S&P500 as the 50 day and 200 day moving averages approach and price is squeezed between the two.
It does not make sense that the 200 day SMA be broken so easily and with light volume. I think that this break is a false upside breakout and we will come back to test the bottom of the double bottom in the 880 - 900 levels.
Only the future holds the answer.......
Subscribe to:
Posts (Atom)