Thursday, June 30, 2011

S&P stays above 1250, but is it a rally?

As predicted from the extremely high pessimism in the market, the S&P 500 index hasn't yet crossed the 1250 threshold. In fact the index hasn't even closed below 1265 during this recent dip, and is now rising towards potential overhead resistance in the form of a declining tops trend line:
Sentiment is still very pessimistic, so my guess is that the S&P will rise through this trendline and officially start a new rally.

Tuesday, June 07, 2011

S&P 1250 is key

The S&P 500 index has been declining towards two trend lines - one long term rising support line which goes back to the March 2009 low, and a short term support level at 1257.

Long term:
Short term:
These two trend lines have basically met at the same price level now, meaning that if the S&P declines through 1250, it will simultaneously violate two supports, leaving the door open to a large continuing decline. However, since sentiment is quite pessimistic right now, my guess is that the stock market will bounce off of these support lines and continue the rally. Time will tell.