Sunday, October 19, 2008

S&P 500 Chart

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As I mentioned in my previous "End of the market crash" post on October 13, 2008 in majority situation after the strong bounce up we may see the attempt of the market to retest the support levels and later this week we witnesses such drop down when on October 16, 2008 the Nasdaq 100 hit the October 10 lows and the S&P 500 and DJI indexes went down close to it. Yet, after that we saw bounce up again and the indexes are still on its way up. I think the question that I put last week "if this is the end of stock market crash" is still not answered. The same as before I would state that October 10, 1008 has put serious point to consider the trend reversal. We had huge volume at that day, the market is in extremely heavy oversold condition, strong rebound has confirmed that market can run up very fast very strongly... All of this make me to consider the high possibility of strong reversal and if not the end of the stock market crash then at least strong mid-term up-trend. Yet, as I mentioned before, I would like to see that the October 14, 2008 highs are broken and the indexes are moving up above them as confirmation of that. Still, for long term investments (401k) I consider that this is good time to buy on such volume when the indexes are so deep down. Even if the indexes will go lower then on the high volume at better position you will buy again. Over the long term the returns from the multiple positions should be rewarded.

Going back to the short-term chart, in my case it is 60-day S&P 500 chart, I may say that the technical indicators are more or less positive and my technical analysis tells me that we still may see some up move. It's difficult to say where the market is going to be in a week. I such volatile market (VIX Volatility index is above 60) we may see strong change in either direction any time. At such time it's especially important to monitor charts on the daily basis. For those who cannon watch charts daily, yet, still would like to make short-term trades I may suggest one thing only - stay out of the market until the volatility is down, your time will come

SP 500 chart - Technical Analysis

The S&P 500, Nasdaq 100 and DJI indexes show similar pictures. The reading of the technical indicators on all these indexes are pointed in the same direction

 - SBV, MV, Advance/Decline Oscillator, RSI and McClellan Oscillator are Bullish
 - MACD and Stochastics are bearish

Overall, more points are in the favor of the further recovery.

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