S&P 500 Analysis

I have stated in my last week "S&P 500 Chart" post about a possibility of breaking the November 28, 2008 highs and that this could mean that we will not see indexes moving down to November 21, 2008 lows soon. This week we saw the indexes (Nasdaq 100, S&P 500 and DJI) moved above these levels. After that the S&P 500 and DJI dropped back below the November 28th High, yet, the Nasdaq 100 index still stays above this level.

A week ago (read my previous week post) we had a short-term overbought market and three negative sessions during the past week confirmed it. Right now my technical analysis is more optimistic than a week ago. The current week decline released the indexes from the short-term oversold conditions, if not fully then at least partially. Red MVO and SBV on December 12, 2008 (see chart below) confirms that: red MVO indicates high volume activity (volume surge) during the price decline or "panic selling", red SBV indicates the Bearish volume accumulation (negative money flow).


Overall at this moment I see more Bullish signals than Bearish. Stochastics, MACD, RSI, SBV on my chart rising, VIX (volatility  index) declines - all of this in the favor of the up-move. The exception is McClellan Oscillator which declines and which is Bearish.

The market is still highly volatile. If a year ago 1-2% run in either direction was a big event, right now we consider it as quiet session. The highly volatile market require constant monitoring and I would not recommend rely on my weekly analysis simply because the sentiment in volatile markets changes sharply and only monitoring charts during trading hours may help spot the reversal points in time. I'm sorry, I cannot do any posting during the week - there is other stuff that has to be done.