Software & Finance

S&P 500 - Feb 2011 Technical Forecast

Jan 31, 2011 S&P 500 closed today at 1286.11 which is just 1.27 % down from its close to two and half years high. S&P closed near 10 days EMA and above its 21, 50 and 200 days EMA.

Last week, both Dow Jones industrial average index and S&P 500 index touched psychological fancy number of 12000 points and 1300 points respectively.

With US unemployment rate (Seasonally Adjusted) remains at 9.4% in Dec 2010 and declining home prices, double dip is inevitable for US in the long term. Fed can not keep the rate low for a long time. When they start increasing the rate, home prices will go down further and it would trigger a new wave of foreclosures.

Let's look the S&P technical levels. S&P 500 is trading well above its 200 days moving average of 1179.80 and above its 50 days EMA of 1254.56. It gives a (wrong) bull signal on S&P 500 to go long.

However it would be perfect time to liquidate the long positions. Significant rise in CBOE Volatility Index (VIX) on Last Friday suggests the investors fear. Still Market is holding its level close to annual high because of its strong technical support. Speculators and Day Traders are hesitating to short the market because of technical support.

This might be the worst time to take long positions on US stock market. Barclays - US Long Term Treasuries Bond ETF (TLT) is trading just above 91 is a good buy. US Dollar Index Bullish (UUP) is also a good buy for conservative investors.

S&P will go down and will break its 200 Days EMA that would lead to panic selling in the market worldwide. FYI - Indian Stock Market (Nifty) already broke its 200 days EMA and looking to regain its support level. I expect the same thing to happen in US stock market also very soon.

Technical Indicators

10 Days EMA 1287.18
21 Days EMA 1279.74
50 Days EMA 1254.56
200 Days EMA 1179.803

Posted on Jan 31, 2011