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Finally! I am settled in Washington DC. I start my Internship at the International Institute of Finance tomorrow.
The IIF <-- click here
It seems short term moves on the S&P500 have gone against my short term Bullish Stance.
June 12 I was preparing to go back to the United States. The S&P500 was at 946. Which started to Drop on June 15th (Monday) all the way to 910 June 17 (Wednesday) , about a 4% drop approximately. For all you bulls, I definitely would say this is a reasonable correction for the time frame in which the S&P500 dropped. One can argue that price levels bounced of 910 support developed all the way back from early may.
Tonight's analysis will be short again unfortunately, I will be working on my currency update through this week and more indepth analysis and more precise calls on the S&P500.
though, taking a look at some charts Id have to say I would be increasing my short term bull to:
Short term: bull
Med term: bull
Long term: bear
Short term being bullish over the next few weeks. Mid term bull being bullish for the 3rd quarter, though I will have to re-evaluate this as I analyze more.
BULLISH EVIDENCE:
The 200 SMA is still under prices despite the past weeks 4% correct. The end of the week ended up strong.
We are possibly seeing critical support changes from 877 to 910.
Back in early January 2009, one could have argued resistence at a 943 high. However, June 1st the S&P500 blew right threw this price level. Though prices are trading approximately 4% below this level, a higher low has been made and price levels climbing above the 940's range should be no problem, considering no major shocks.
BEARISH EVIDENCE:
Fundamentally, Id say consumer groups wouldn't be doing much better which can be arguably reflected in poor economic conditions.
Though we have seen improvements in the financial sector, we are no where near full recovery.
Energy, arguable should be doing better as reflected by oil prices (bad for airlines). However, considering a weak consumer I would expect less travel and less driving this summer so this definitely can be a drag on the economy/s&p500. (I haven't checked data on this, so I would appreciate anyone who is fundamentally oriented to check if this scenario is true or not).
Job markets have not improved and can continue to worsen.
Sentiment:
On a more interesting note, sentiment seems to be more bullish than back in the early months of this rally.
perhaps this is reason to start considering timing for short positions. though right now I maintain a bullish stance (see my bullish arguments)
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SIDE NOTES:
I was discussing some interesting ideas the other day and the significance of 200 SMA's. It would seem that the 200 SMA does have significance in that many quant/technical funds have defaults set on this average and can exert considerable amounts of volume and pressure on the prices which is why we could have been seeing a nice short rally June 1st to June 12 when the 200 SMA crossed under prices. (Im not exactly sure if this exactly how it works, but that is what I got out of the conversation, so if Im wrong please do correct me by all means!)
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SUMMARY:
I maintain short term and mid term bullish stance with evidence shown in my bullish section. the Bearish evidence arguably matters in the longer run as this short term bullish rally will lead to a return to fundamentals in the long run.
Price Target:
Arguably with 943 resistance already broken through from early June, I am certain we will be seeing 1000 on the S&P500 before the year is out.
When should one go short if they are long term bear? Well, ill certainly have to entertain this thought for my next few blogs.
Support/Resistance Levels:
I definitely will be looking to 1000+ as resistance levels, and between 877 and 910 for support levels. So obviously this means I will be watching prices if they continue to dip lower for this up coming week.
-Alex
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