Technical talk: Breaching the 200-day line

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The comments below were provided by Kevin Lane of Fusion IQ.

So far the futures are up strongly, with the S&P 500 futures holding above its 200-day moving average near 933. Once open, if the S&P 500 can stay above its 200-day moving average (for most of the early morning), we are likely to see buyers come in a move stocks up towards the next minor resistance of 950. However, the next real test would not come into play until the 1,000 level.

The market continues to climb the proverbial “wall of worry” as many investors remain underallocated to equities with large liquidity pools still on the sidelines. Anecdotally, as long as sceptics of the rally remain the loudest voice’s it reinforces the idea that investors are underallocated and the market could move higher still.

technical-talk-010609a

Source: Stockcharts, June 01, 2009.

[PduP: Bespoke higlighted that it has taken 523 calendar days (359 trading days) since the S&P 500 last closed above its 200-day moving average.]

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3 comments to Technical talk: Breaching the 200-day line

  • I’m not very clear about the ‘large liquidity pools on the sidelines’. Where exactly are these liquidity pools? Are they stashed under someone’s mattress or sitting in a warehouse stacked floor-to-ceiling?

    Is it more likely that cash not invested in the equity market is invested in money market instruments or short term fixed income instruments? In which case, it is not on the sidelines, but has become a part of the financial system.

  • BJ

    The market in march was very over sold. But I wonder about the sustainability of this rally as
    his is manufactured rally based on manufactured earning by financial institution and extreme market manipulations. That is a fact.
    Most of the “green shoots” arguments are highly subjective and questionable at this point. One prime example: “better than expected arguments”
    That is probably why people are not committing to this market. I am afraid “climbing the wall of worry” doesn’t quiet apply hear.
    BJ

  • When did anyone last see such a huge sustained rally that did not reverse itself with sufficient force to bring tears to the eyes?

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