Thursday, May 03, 2012

headed higher

Here is a daily bar chart of the cash S&P for the past year.

It looks to me like the April 10, 2012 low will hold and that the market is headed for at least 1465 and quite possibly for 1575. You can see that the April 10 low developed just below the rising 50 day moving average and at the rising blue dash trend line I have drawn. Not only that but at the low the market had dropped just a shade less than it had during the December 2011 reaction (blue dash rectangles). And the S&P was only about 10 points below its 2011 high (green dash line) - normally markets find support near old high points once they have advanced far enough above them.

All in  all it looks like the April 10 low ended  a normal bull market reaction. How far up might the market go from that low around 1360? I see two obvious measuring sticks. The first is the rally from November 25, 2011 to December 8, 2011 which carried the S&P up about 105 points. A similar rally from  1360 would put the market at 1465.The second measuring stick is the rally from the October 4 low to the October 27 high in 2011. That rally was about 215 points. Adding that to 1360 gives an upside target of 1575, just about the level of the 2007 bull market top.


Bill said...

I believe a rally is coming but not until the second half of the year. The market is not in an oversold enough condition to generate any meaningful rally right now. Also there's no news (earnings or economy) to spark a rally. In summary neither the technicals nor the fundamentals are in place for a rally.

MadMax said...

You are absolutely wrong
Zero chanches to see a new high, before that a new bottom is in place
We are headed to breakdown 1350 with further decline near 1320-1270 level
Open your mind to a bearish perspective. You are too bullish
Seasonality is negative, particularly May in the election year. The earning season is effectively complete
We could see a bottom around June, 10 for my work

StockTradingNinja said...

It looks like that dashed blue trend line was broken today and it is now becoming resistance?

EP said...

A lot of divergence at the present time, all indicators.

Next convergence will be the good one for a rally.. wait and see

Win said...


This is not good for my positions (I am long), but I now think we might see 1340 before the rally comes. A lot depends on the jobs number tomorrow.