Weekend S&P Glance

Mar 30, 2008: 9:24 AM CST

Before we start the upcoming trading week, let’s look at the S&P 500 Index from a brief technical perspective.

A few quick observations:

  1. There is a positive momentum divergence forming
  2. The 1,260 – 1,270 price zone has provided solid support
  3. The 1,400 zone has provided solid resistance
  4. Volume increased on the recent downswing and decreased on the counter-rally up
  5. Volume is showing the lowest levels of 2008 – are people disgusted?
  6. The structure of the moving averages is in the most bearish orientation possible
  7. Price failed once again to overcome the falling 50 period moving average

Due to the overall downtrend structure and recent failure to overcome moving average resistance, I would say there is a fair chance for price to head lower and attempt a retest of support near 1,270 at least.

While the market may indeed be building a base of support to consolidate and reverse, we cannot ignore the strong negative (downtrend) structure of recurring lower highs and lower lows that over-rule other ‘technicals’ at the moment.

A quick glance at the weekly chart confirms the potential bearishness:

Notice the two recent ‘long upper shadows’ which failed to retest the falling 20 month moving average properly. Both developments reveal weakness on the part of buyers to force a close at the top of the weekly range, giving more ground to the sellers (bears).

Should price solidly break the 200 weekly average and make new lows beneath 1,250, I would consider that an extremely bearish development and would note that there would be few immediate levels to support price action (with the exception of the June/July 2006 price lows).

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1 Comment

One Response to “Weekend S&P Glance”

  1. boredtrader Says:

    Seems like everyone is just skeptical as hell now, the rallies have all been Fed induced and not held. Seems like everyone’s just waiting for a break to new lows and the recent volume seems to confirm this to me.