June 28 Midweek Triple Index Resistance Check

Jun 28, 2012: 7:50 AM CST

With Thursday developing into another big news day, let’s take a quick morning check on current daily resistance (or key) price levels and what to watch from here (upper and lower short-term targets)  in the US Equity Markets.

First, the S&P 500:

Let’s discuss the current conditions which apply to all indexes.

First, June gave us an initial “Bull Trap” scenario with the push beyond the falling 50d EMAs (blue falling lines), and the failure to hold above the 50d EMA resulted in the current downswing.

Price is now pushing up into the 50d EMA resistance a second time.

Second, Volume has steadily decreased this week, particularly on the retracement rally into current resistance – that’s not a bullish development.

Third, all three indexes remain above their rising 200d Simple Moving Averages – a factor to watch which closely (should price break under this key indicator, it could exacerbate selling pressure).

And finally, price is currently exactly in the midpoint or middle of the recent short-term swing high and low, both of which become objective targets accordingly.

Now back to the S&P 500.

The current key resistance area exists near 1,340 where an upside break would target the 1,360 swing high again, but as long as resistance holds (price is under 1,340), the lower target confluence of 1,300 (200d SMA) and then 1,270 are firm downside targets.

All factors are similar in the Dow Jones Index:

The falling 50d EMA and price resistance exists at 12,650, where another upside breakout would target 12,800 to 12,900 (prior high), but as long as price remains under the 12,700 level, then 12,400 (200d SMA) then 12,100 (even 12,000) are the firm downside targets should the sell-off continue.

Finally, the NASDAQ key levels and swing targets:

For reference, the highlighted region in all charts corresponds not just to the falling 50d EMA, but the prior price resistance highs from May and June.

The NASDAQ current resistance level exists just under 2,900, with an upside breakthrough here opening an upside target back to 2,950.

Otherwise, while price remains under the 50d EMA and 2,900 confluence, a simple downside target of 2,800 (200d SMA) then 2,750 (prior swing low) are in play.

Technically, the indexes remain in a short-term consolidation from mid-May, and any firm breakthrough beyond the recent swing highs or swing lows open the indexes to travel on to the appropriate targets.

Until we do see a breakthrough beyond the most recent swing high or swing low (from June’s wider range), then play carefully between these levels with respect to the current 50d EMA resistance.

Corey Rosenbloom, CMT
Afraid to Trade.com

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