Technical Talk: S&P 500 – trying to make up its mind

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With the Dow Jones Industrial Index yesterday having broken into positive territory for the year to date and the S&P 500 Index having accomplished this a few days ago, the jury is out on the near-term direction of the market. Notwithstanding a five-day winning streak for the S&P 500, the fact that volume has been contracting on up-days and expanding on down-days is complicating the outlook.

Kevin Lane (Fusion IQ) refers to the chart of the S&P 500 below, remarking that as long as the Index is holding above a minor support zone in the 1,116 to 1,112 area (red line), the bias remains up. “A trade below this support area would lead to a minor pullback towards the 1,105 area (lower green line). Below 1,105 the next level of support would be in the 1,000 region,” said Lane.

sp500

Source: Fusion IQ, March 4, 2010.

The February lows are also key levels and one should, in my opinion, give the uptrend the benefit of the doubt unless these levels are breached. The levels are: Dow Jones Industrial Index (9,835 vs current level of 10,446), S&P 500 Index (1,044 vs current 1,124) and Nasdaq Composite Index (2,100 vs current 2,292.) Adam Hewison (INO.com) highlights these levels in his latest video analysis of the principal US stock market indices which can be accessed here.

“… major stock market indices have rallied from their rising 200-day MAs and some are beginning to test their recovery highs. This means investors with stock market long positions can sleep at night, provided that the February reaction lows are not retested, let alone broken, added David Fuller (Fullermoney) from across the pond.

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Read more on S&P 500 (SPX), Dow Jones Industrial Average (DJI) at Wikinvest
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2 comments to Technical Talk: S&P 500 – trying to make up its mind

  • Bob King

    A Fibonacci retracement for the SPX chart drawn from the 2008 May high to the MARCH 2009 low places the SPX (Friday close at 1138.70) just below the 61.8% line.

    It’s something to consider whether it is to take profits or wait for another day.

  • Superstar

    Re Adam Hewison,

    I’ve followed and subscribe to his emails for quite a while now. Have been keeping track, mentally at least and his track record is not really that good.

    Whether its his lecture on AAPL or RIMM or gold or oil his record is frankly inconsistent.

    FYI

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