Friday, October 11, 2013

Yesterday’s bullish move took out layers of resistance and combine that with today’s follow-through, this rally needs to be taken semi-seriously. Semi since yesterday’s 2% up close was really incredible but typically, moves like that occurs when the market is grossly oversold, not when the SPX loses about 5%. While a short term delay of the budget talks will likely be crafted to curtail further damage of the markets, all this will be re-visited again so there is reason to be concerned. The main inflection point I am focused on is to see if the SPX can close above 1710 on the weekly chart.  

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S&P 500 (SPX) SHORT TERM OUTLOOK: BULLISH

Sentiment has changed again and what looked promising on the downside now looks promising on the upside. However any remaining short term gains going forward are likely to be moderate or very little given the weak political agenda.Image

In an effort to follow the price continuation which is quite impulsive, the 78.6% Fibonacci level at 1712 is generally the last line of defense. How the short term timeframes that are on TD Sell Setups interact with that 78.6% Fib level will determine if there are further gains at hand. 

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL

A little tenuous, but there is follow through on price today and the VIX has collapsed. Best to see what kind of retracement forms.  

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: NEUTRAL

Same as last week. Switch to bearish if SPX closes below 1687. Also will have to come to terms of another bullish initiation if SPX closes above 1711 on the weekly chart.ImageImageImageImage

 

The 1710 level will probably be the main inflection point for next week. Since August, the weekly SPX has not closed above 1710. That is quite a formidable resistance level so if there is a close above 1710 next week, the interpretation can be the SPX weekly was correcting through time and ready for another leg higher. Otherwise, a weekly close under 1687 is bearish. Also note, the Russell 2000 (RUT) will record a 13 count TD Sell Countdown. This brings another price exhaustion marker into the mix. Lots of bull/bear signals to digest for next week.

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S&P 500 (SPX) LONG TERM OUTLOOK: NEUTRAL

Monthly chart is extended and within’ the risk level parameters of the 9 and 13 TD Sequential clusters in April and May. (last updated September 30th)

 

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