S&P 500 Forecast From Sep 10, 2012 - Unemployment rate to touch double digit by this winter! (Expected Trading Range: 1278 - 1460)
Sep 07, 2012 - S&P 500 closed today 1437.92 which is about 31 points up compared to last week close of 1406.58 on Aug 31, 2012. S&P 500 was trading between 1,396.56 and 1,437.92 which is a swing of about 41 points.
Note: US Market was closed on Monday, Sep 03, 2012 for Labor Day.
Last Week Analysis - Technicals Vs Fundamentals!
S&P could set a new 52 high of 1437.92 immediately following is the worst Job report! Market will always make a fake move to confuse the investors before taking the correct move. Even though the Job numbers does not look good, market was moving up thinking that Fed will not increase the interest rate so that housing prices will stablize. Market was going up beliving that S&P will touch its all time high of 1565.15 again!
No matter what, Fed has already created the credit bubble by keeping the interest rate low for over 3 years. And this credit bubble will burst; this is going to be a very surprise and another disaster to the economy. The americal workforce dropped to the lowest level in 31 years. Market is getting ready to crash! But the only question is whether it will happen immediately before or immediately after the US presidential election.
US will hold presidential elections on Nov 06, 2012
With respect to US long term treasury prices, TLT closed today at 124.03 which is a big loss of 2.89% for this week compared to the last week close of 127.72. However TLT reached its all time high point of 132.21 on July 25, 2012. The upside is very much limited on US treasuries and downside is huge. In the short time, it will go up. So if you are trading on US treasuries in the short term, it is a good time to liquidate your long position on US treasuries.
Last Week Low: 1396.56
Last Week High: 1437.92
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 at 14.38 which is a strong loss of over 17% from the last week low of 17.47. The strong slump in 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 2X OTM put option - Long Strip.
2. Long Stocks and stop loss orders
3. Long Stocks with long put options
Note: OTM - means Outside the money.
Next Resistance Levels:
strong resistance level at: 1565.15 set on Oct 9, 2007 [All time high]
strong resistance level at: 1413.38 set on April 3, 2012
strong resistance level at: 1400 - crazy market move
strong resistance level at: 1345.02 set on Jul 22, 2011.
strong resistance level at: 1348.24 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: 1332.54 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 Sep 09, 2012