Unfortunately I cannot give a fully analysis this Sunday, as I am too pressed for time. Just some notes:
Unfortunately last week I was wrong about being an drop in the early week, however my bullish call for the week was certainly correct. Either way being positioned bullish last week was the right move.
We are getting some indecisiveness at the close of the previous week. The stress test proved to be no big surprise on Thursday. Much of the news was priced in as seen by the huge jump on Wednesday. Which would have been the proper interpretation counter to other ideas that I blogged about on Wednesday.
This week is a big week as my new call on 934 resistance from last week will be tested this week.
Despite the bullish upper shadow on the drop on thursday, there was a significant volume spike, considering this perhaps this maybe evidence that resistance at 934 will hold this week.
Furthermore, more evidence for the bearish pictures is developing, the 200 SMA is appearing on the daily chart vs two weeks ago only the 150 SMA was in the daily chart. The RSI is being sustained at near overbought levels, while the MACD is a bit unclear.
Summary:
Ill say the big things to watch this week is 934 resistance level, and to see if the 200 SMA will cross under prices (which would make me quite bullish for the S&P500 into the 3rd quarter if sustained for a few weeks below prices). It is more likely that we will see a holding of resistence coicide with at the 200 SMA moving out of the daily charts along with a fall in the RSI and a convergence of averages on the MACD.
Forecast:
My past discipline has told me to stick to the current trend until the trend has clearly broken. Despite this bearish picture developing I will maintain a bullish stance this week, which would most likely mean a break in resistance of 934. Further bullish confirmation will be seen of the 200 SMA moving and staying under prices for the next few weeks.
If we get a strong break and price closure above 934 my next price target will be 952. Considering the S&P500 is pushing into oversold conditions, there may need to be a correction before this level is seen (I was also clearly wrong in there needing to be a correction for 934 levels to be reached last week, as after 877 there was no correction). When may this 952 hit then if this rally continues? Considering this is only about a 2% move, if prices get a strong close above 934 this week, we may see 952 by the end of next week.
Keep those bullish pants on... don't think its the right weather for bear shorts just yet...
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