S&P 500 Forecast From Jun 18, 2012 - Not safe to hold long positions! (Expected Trading Range: 1278 - 1352)
Jun 15, 2012 - S&P 500 closed today 1342.84 at which is about 17 points up compared to last week close of 1325.66 on June 08, 2012. S&P 500 was trading between 1306.62 and 1343.32 which is a swing of 37 points.
Last Week Analysis - Market Rally Towards 50 days EMA
Every day news coming out from Euro Zone created a huge panic in the market. Due to the technicals, S&P 500 regained its 50 days EMA. Besides everyone wants to front run the Fed by taking long positions on US treasuries. Fed is not going to buy at high price on its long dated securities. FOMC meeting is scheduled on Jun 19 and Jun 20, 2012. You can expect the Fed Statement by Wednesday Jun 20, 2012 at 2:15 PM EDT.
US will hold presidential elections on Nov 06, 2012
With respect to US long term treasury prices, TLT closed today at 126.40 with a little gain for this week compared to the last week close of 125.21. 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: 1,306.62
Last Week High: 1,343.32
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 21 today. VIX has to consolidate from these levels before it makes up 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.
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: 1320.87
21 Days EMA: 1322.58
50 Days EMA: 1337.80
200 Days EMA: 1299.58
Next Resistance Levels:
strong resistance level at: 1345.02 set by Jul 22, 2011.
strong resistance level at: 1340.73 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: 1299.58 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 Jun 17, 2012