Sunday, November 9, 2008

S&P 500

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In my previous "DJI Chart" post on November 2, 2008 (a week ago) I have described the possibility of the slide. The market was overbought in short term at that time and during this week we shad two session of the slide (November 5-6). I think some trader are worried if this slide is going to continue to the 10/10 (October 10) lows.

I would repeat myself that over the longer term I'm still bullish and this slide did not change any of the technical indicators I use on the higher-timeframes (1-2 years charts) - all of them are still bullish and all of them point to the higher odds of the further recovery. Yet, the question about the retesting of the 10/10 lows is not about longer term. I would rather consider it as a short-term question.

In short-term, the technical analysis applied to the 60-day chart (1 bar = 1 hour) is more bullish than bearish and I would expect to see short-term up move within the next few sessions. If a week ago I saw the short-term overbought indexes, today I see short-term oversold market.

S&P 500 chart
The technical analysis applied to the S&P 500 index above is the same as it would be applied to the Nasdaq 100 and Dow Jones Industrials indexes. At the current moment all three main indexes show similar sentiment:

a) We see Bearish volume surge - red MVO which already equal to zero - This Bearish volume may push the indexes up;

b) Advance/Decline oscillator is rising and is above to cross center line. This suggest that investors are moving towards advancing stocks - they are buying;

c) MACD is moving up which  is indication of Bullish trend;

d) RSI and Stochastics moved above 30 and 20 levels respectively which is bullish sign as well;

e) McClellan oscillator started to move up which is a good sign for up-move, yet it still below zero line which indicate bearish market;

f) SBV show small advance, yet, this advance is too small to consider this technical indicator bullish.

Overall, in short-term I would expect an up-move rather then further drop towards the 10/10 lows. Again, the market is still very dynamic and volatile and today's bullish sentiment can reverse very fast. Because of that I would recommend monitoring charts every day.

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