S&P 500 Forecast From July 09, 2012 - Go back to 200 days EMA! (Expected Trading Range: 1278 - 1355)
July 06, 2012 - S&P 500 closed today 1354.68 which is about 7 points down compared to last week close of 1362.16 on June 29, 2012. S&P 500 was trading between 1348.03 and 1374.81 which is a swing of 27 points.
Last Week Analysis - Job Data and Interest Rate Cut by Central Banks
China's central bank, European Central Bank and Bank of England cut thier benchmark interest rate gave some support to the stock market. However It is not enough to hold the rally and as expected market started moving south on Friday. We may have to face the increased voltaility in the coming months and until stock market finds their clear downward direction. The huge rallies happening in the coming months would be because of short squeeze and would be considered as bear market rally. Eventhough the long term view looks negative, occascional powerful rallies would shake the market with panic buying. So trading without hedging is a clear risk in the coming months.
US will hold presidential elections on Nov 06, 2012
With respect to US long term treasury prices, TLT closed today at 127.06 which is little gain for this week compared to the last week close of 125.20. It is the perfect time to initate short position US treasuries. The upside is very much limited on US treasuries and downside is huge.
Last Week Low: 1,348.03
Last Week High: 1,374.81
If you are a medium or long term conservative investors,
1. Initate short position on US treasuries.
2. Liquidate your long positions on Stocks and convert them to cash (US$)
For Speculators and Intraday Players - Bet on Volatility
CBOE Volatility Index (VIX) closed today around 17.10 today which is near flat for the week. The collapse of VIX signals that market does not have any fear and is going to make a powerful upmove. 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. You can consider taking long positios on VIX also.
Only if you are day trader, you can have the following options:
1. Buy 1X OTM call option and 1X OTM put option - Long Strangle.
2. Long Stocks and stop loss orders
3. Long Stocks with long put options
Note: OTM - means Outside the money.
10 Days EMA: 1351.25
21 Days EMA: 1342.06
50 Days EMA: 1341.70
200 Days EMA: 1300.03
Next Resistance Levels:
strong resistance level at: 1345.02 set by Jul 22, 2011.
strong resistance level at: 1341.70 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: 1300.03 set by 200 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 Jul 07, 2012