Sunday, August 15, 2010

S&P500 Very Short Term: Support at 1070

This move down since the trendline break, has all the looks of an impulsive decline, and may be the beginning of a wave C or 3 down. Meanwhile, Shanghai Composite seems to have put in a medium-term bottom last month. As proposed in a post earlier this year, Shanghai leads SPX by 3-4 months. This could mean a medium-term bottom in SPX may be due only around end-September or October. This is pure speculation of course, as correlations only last as long as they last!

Very short-term, support for a technical rebound may be found around 1070 on the SPX, based on the rising trendline(green) as shown on the chart

Upside limited by 1090-1105, but i wouldn't be making upside bets in this market. Further supports around 1060, 1040. A break below the latter might trigger the larger Head & Shoulders pattern.

Stay nimble, all the best!
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