S&P 500 500 Technical Forecast From Sep 26, 2011 - Get Ready for Bear Market Rally
Sep 23, 2011 - S&P 500 closed today at 1136.43 which is about 80 points down compared to last week close of 1216.01 on Sep 16, 2011. S&P 500 experienced a huge swing of about 106 points between 1114.22 and 1220.39 in the last week.
Last Week Analysis - Euro Zone fear and Fed Plan on Operation Twist
S&P 500 experienced a huge swing of about 106 points between 1114.22 and 1220.39 in the last week. The major triggering for the last week is the announcement operation twist by Fed on Wed Sep 21, 2011 at 2:30 PM. Long term treasuries being bought by amature investors by front running fed which triggered huge sell off on equities. Fed plan on keeping the long term rates and short term rate high is very much supportive for dollar. Due the powerful rally in dollar, gold and silver prices started moving south.
Last Week Low: 1114.22
Last Week High: 1220.39
If you are a long term conservative investors, it is the time to liquidate all of your long position US treasuriesand consider shorting US Treasuries gradually in the coming weeks with a ladder of order.
The collapse in US Treasury prices are inevitable since even with QE3, Fed will start buying only when the treasury prices are low and front running the Fed is not a good strategy in investment.
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 - Get ready for bear market rally with option strap
The debt talks, earning season and on going crisis from Euro Zone increased the volatility. 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.
Current levels on S&P 500 and double top on US treasuries suggest to take long positions on equity market. It is not a bullish signal but a powerful bear market rally.
Only if you are day trader, you can have the two following options:
1. Buy 2X times of call options and 1X time of put option - known as option strap.
2. Short stocks with Stop Loss orders or with long call option - known as hedging.
10 Days EMA: 1170.82
21 Days EMA: 1180.43
50 Days EMA: 1208.30
200 Days EMA: 1248.15
Next Resistance Levels:
strong resistance level at: 1208 - 1248 set by 50 days and 200 days EMA.
strong resistance level at: 1248.15 set by 200 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 1119.46 set on Aug 08, 2011
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 Sep 24, 2011