Sunday, June 27, 2010

S&P500 short-term: Stiff Resistance around 1100

In my last post, i was looking for a post-breakout consolidation period above 1100, before a launch higher towards 1140-50 area. What actually transpired was a straight up move to 1131, and a prompt reversal below 1100 area. This is bearish action.

In the very short-term, we are oversold on the major indices, and we can expect a continuation of the friday reversal, early next week, towards STIFF RESISTANCE of 1100. A convincing break above 1100 area is needed for a retest of 1130 levels. A believable Head & Shoulders pattern, would require more work on the right shoulder for sure. Meanwhile, the range would be between 1040 & 1100.

Alternate EW labelling

Although the wave A labelled above looks like a complete 3-waver, there is always the probability that the action towards 1040 was a nested 1-2, 1-2. In this case, a severe wave 3 could follow.

Except for daytrades, I am going to sit out this market for now. All the best!
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