S&P 500 Forecast From Jan 16, 2012 - Wrong bullish signal to collapse, long VIX (Expected Trading Range: 1158 - 1300)
Jan 13, 2012 - S&P 500 closed today at 1289.09 which is 11.28 points up compared to last week close of 1277.81 on Jan 06, 2012. S&P 500 was trading between between 1274.55 and 1296.82 which is a swing of 22 points.
FYI - US Market will be closed on Monday Jan 16, 2012 for Martin Luther King, Jr. Day.
Last Week Analysis - Rally Continues as it Crossed 200 days EMA
S&P 500 closed slighly up about 11 points for the last week by swinging in either direction with Euro Zone news and US unemployment report news, earnings season. Both S&P testing couple of times its 200 days EMA and TLT is trading higher signal that S&P 500 will enter bear market very soon. VIX closed today 20.91 signalling that investors are not fearful in the stock market also signalling that correction is imminent.
FYI - France will hold presidential elections on April 22 and May 6, followed by general elections in June.
US will hold presidential elections on Nov 06, 2012.
With respect to US long term treasury prices, TLT closed today at 120.88 which a gain of 1.81% for the week compared to last week close of 118.73. US treasury is now too late to short and too early to buy. US treasuries (Ticker: TLT) would bottom near 100 - 103 and TLT upside would be maximum of 125-130. Alternatively you can consider buying TMV.
Note: US Interest Rate Bottom is currently happening, it may test the bottom in the coming week.
Last Week Low: 1274.55
Last Week High: 1296.82
If you are a long term conservative investors,
1. It is the time to add / hold short position on US treasuries on long term. TLT closed today at 120.88 and it would bottom near 100 - 103. The upside target is around 125.
2. US Treasury prices started moving up with retesting the interest rate bottom. 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. It is another good time to initiate short positions on S&P. Since S&P is trading around its 50 days EMA and 200 days EMA, It is unlikely the market will have a bull run crossing this point. There might be a fake rally for a day or two to confuse novice investers to put them on long side, before market makes a significant down move.
For Speculators and Intraday Players - Short Stocks with Stop Loss Orders and Long Options Strip
CBOE Volatility Index (VIX) also trading volatile and closed at 20.91 which is nearly flat for the last week. There is a good chance for rally on VIX, it can go up to 40 in the short run. It is also good idea to take long positions on VIX. 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 2X OTM put option and 1X OTM call option.
2. Short Stocks and stop loss orders.
3. Short Stocks with long call options
Note: OTM - means Outside the money.
10 Days EMA: 1281.54
21 Days EMA: 1267.56
50 Days EMA: 1248.25
200 Days EMA: 1262.83
Next Resistance Levels:
strong resistance level at: 1285.08 set by Oct 28, 2011.
strong resistance level at: 1262.83 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 leval at: 1248.25 set by 50 days EMA
strong support level at 1189.40 set on Nov 26, 2010
strong support level at 1119.46 set on Aug 08, 2011
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 Jan 14, 2012