S&P 500 Technical Forecast Weekly Starting August 15, 2011 - US$ is the only safe heaven
August 12, 2011 - S&P 500 closed today at 1178.81 which is about 20.57 points down compared to last week close of 1200.28 on August 05, 2011. Even though the number looks good, last week experienced a massive volatility in the US stock market in every other day with US debt downgrade by S&P. Last week low point is 1101.54.
Last Week Analysis
As per earlier weeks prediction, S&P 500 broke down 200 days EMA significantly with the panic of US Debt and Euro Zone anxiety.
Last Week Low: 1101.54
Last Week High: 1,198.48
If you are a long term conservative investors, I have been suggesting to go long on US treasuries in the past couple of weeks. Now it is the time to liquidate some percentage of your long US treasuries position and consider moving of high yield dividend paying stocks. Even though more correction is ahead of us, there would be a relief rally.
You can cover some of your short position you have accumulated so far. Currently dollar is the only safe heaven for long term conservative investors.
For Speculators and Intraday Players - Go long with Hedging - Option strap
The debt talks, earning season and on going crisis from Euro Zone increased the volatility. Trader bought call options on VIX might have earned huge profit from their trades. Still fundamentally the US market is very week due to unemployment and slumping house prices along with US debt downgrade. Always fundamental wins in the long run.
Only if you are day trader, you can have the following two options:
1. Long on the market and hedge using long put options - known as long position with put hedge.
2. Buy 1X times of put options and 2X time of call option - known as option strap.
10 Days EMA 1195.92
21 Days EMA 1236.46
50 Days EMA 1274.29
200 Days EMA 1259.37
Next Resistance Levels:
strong resistance level at: 1259.37 set by 200 days EMA
strong resistance level at: 1274.29 set by 50 days EMA
strong resistance level at: 1386.95 set on Mar 16, 2007
strong resistance level at: 1433.06 set on Aug 03, 2007
strong resistance level at: 1440.70 set on Nov 23, 2007
strong resistance level at: 1453.55 set on Sep 07, 2007
strong resistance level at: 1,530.23 set on May 30, 2007 (first closing high after dot com bubble)
strong resistance level at: 1,552.87 set on Mar 24, 2000 (all time high during dot com bubble)
strong resistance level at: 1,565.15 set on Oct 09, 2007 (all time high during housing buble before sub prime crisis)
Next Support Levels:
strong support level at 1189.40 set on Nov 26, 2010
minor support level at 1064.59 set on Aug 27, 2010
strong support level at 1022.58 set on Jul 02, 2010
strong support level at 1036.18 set on Oct 30, 2009
strong support level at 946.21 set on Jun 12, 2009
strong support level at 827.37 set on Sep 27, 2002
strong support level at 683.38 set on Mar 06, 2009
strong support level at 638.73 set on Jul 19, 1996 - Might see this number again when completing double dip bottom
Posted on August 14, 2011