I charted the S&P 500 Index ($SPX) after the markets closed on Friday, 7/9/10, after it finished the week at 1,077.96.
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As I predicted in my DJIA post last week we saw the bounce we were due for from the lower trend line. This week’s chart seems to show the opposite
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I charted the S&P 500 Index ($SPX) after the markets closed on Friday, 7/9/10, after it finished the week at 1,077.96.
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As I predicted in my DJIA post last week we saw the bounce we were due for from the lower trend line. This week’s chart seems to show the opposite now that we’ve reached the upper side of the declining trading range. It’s not quite as clear cut though. The SPX made it above its 10 day moving average with two confirmation days Thursday and Friday and even nipped the 20 day moving average line at the end of the day on Friday to close above it by a hair. Both of these indicate more bullish days to come. The SPX is still trading below the more powerful 200 day moving average though. That’s where a bigger barrier could be waiting if the trend line of lower highs breaks.
Although this past week was up strongly based on price, the low volume levels have to make a technician question its true strength for the longer haul. Williams %R leans towards the bullish side though with it breaking out of oversold and then getting a few more good confirmation days higher. If we are to see this two and a half month trend line of lower highs break and the SPX make it up to the 200 day moving average that’d be another 3% or so from here. 3% is nothing to be upset about, but hardly worth taking a big risk for it when waiting for a clean break above the 200 dma won’t cost you too much in missed opportunity versus what a reversal could do to your account if you’ve mistimed it.
This week offered some good fun for the bulls, but it was all on low volume and resistance is looming. It might be wise to see if the trend line of lower highs breaks before piling in too much cash. The easy money from the bottom is already gone for now, but we’ll all have many more opportunities to grab it once this new swirl of dust settles.
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