Technical Talk: S&P 500 action calls for caution
The comments below were provided by Kevin Lane of Fusion IQ.
As is evident in the chart, the S&P 500 Index still remains in an uptrending wedge (green lines). However, for the last two weeks it has rallied above but then fallen back below its downtrend line (red line). While two weeks of stalling at resistance is not a major concern yet, it does at the very least raise a cautionary tone given the fact that the S&P 500 has had such a large, uninterrupted advance.
Weekly momentum indicators are losing momentum and are close to flashing some sell signals; however, until near-term support is broken near 1,026 (blue line and arrows) it is hard to become too negative.
So, to reiterate, some yellow lights are flashing but the bottom line is the trend is up and still intact and only a move below the 1,026 level would be seen as a negative.
Source: Kevin Lane, Fusion IQ, November 30, 2009.
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