S&P 500 Forecast From Nov 07, 2011 - S&P to retest 200 days EMA, but would fail (Expected Trading Range: 1090 - 1262)
Nov 04, 2011 - S&P 500 closed today at 1253.23 which is 32 points down (2.48%) compared to last week close of 1285.08 on Oct 28, 2011. S&P 500 was trading between between 1215.42 and 1263.21 in the last week.
Last Week Analysis - EU anxiety triggered Selling and then relief rally
S&P 500 closed down by 2.48% for the last week. S&P 500 just closed 4 points above at its 200 days EMA of 1249.46. As per my last week forecast, Market started moving down in the begining of the week with overbought condition and also EU anxiety triggered selling pressure again. In the later part of the week, market had a relief rally. It would be a another good time to liquidate your all long positions and create short positions on equities slowly. US 30 years treasury prices went up in the early week and currently it is looking for direction. US treasury is too early to buy and too late to short. US treasuries (Ticker: TLT) would bottom near 100 - 103. TLT closed today at 116.48.
Note: US Interest Rate Bottom retesting will happen again in the coming months.
Last Week Low: 1215.42
Last Week High: 1263.21
If you are a long term conservative investors,
1. It is the time to short US treasuries on long term. TLT closed today at 116.48 and it would bottom near 100 - 103. If you are on the profit side, you can liquidate your long position. You can initiate long position ono US treasuries, when it started moving below 105 gradually.
2. US Treasury prices collapsed significantly. Still Fed Fed would on QE3 announcement until the yieds are very high and the prices are very low. Front running the Fed is not a good strategy in investment.
3. US$ is only safe heaven. You can invest little portion of your investment on bear funds like FAZ, SKF, QID, TYP, etc.
For Speculators and Intraday Players - Short the Market with stop loss or long on long dated OTM Put options
CBOE Volatility Index (VIX) plunged a lot on last week. 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 options:
1. Buy long dated (OTM) put option - at least one month expiry time.
2. Short the market with stop loss order
3. Short the market with long call option (Hedging)
Note: OTM - means Outside the money.
10 Days EMA: 1245.47
21 Days EMA: 1229.05
50 Days EMA: 1214.44
200 Days EMA: 1249.46
Next Resistance Levels:
strong resistance level at: 1249.46 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:
minor support level at 1214.44 set by 50 days EMA
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 Nov 06, 2011