Wednesday, October 12, 2011

S&P 500 Technical Update (Chart) *SPX surges above 1200!*

$ $ $

USA personal income decreased in August, 2011


S&P 500 The S&P 500 closed at 1207.25 on Wednesday, October 12, 2011. The S&P 500, SPX, is up +4.48% at midweek, up +6.70% in September and the quarter to-date, down -4.01% for 2011, and up +78.45% since the March 9, 2009 market cyclical bottom. The SPX closing at 1363.61 on April 29, 2011 was a multi-year closing high and the S&P 500 is now -11.47% below that peak.

Extreme Trading Range Since August 4, the S&P 500 has traded within a very wide trading range (see chart below) from an intraday high of 1230.71 on August 31 to an intraday low of 1074.77 on October 4. That is a 155.94 point trading range and a midpoint of 1152.74. SPX closed above the midpoint of this trading range on Wednesday, October 12.

Bear and Correction Territory The S&P 500 has been below the slightly descending 200-day moving average (1276) since August 2, 2011. The S&P 500 has been below the mostly level 400-day moving average (1211) since September 19, but initially dropped below on August 4. The SPX is now -11.47% below the peak, multi-year closing high of 1363.61 set on April 29, 2011. 10% below the peak is considered a correction market and 20% below is considered a bear market, therefore the SPX is in a correction but not in a Bear Market. All of 3 of these indicators can define a bear and/or correction market and territory.

Russell 2000 & Dow Jones Transports (Barely) Rally Out of Bear Market Both the Russell 2000 and Dow Jones 20 Transportation Average rallied this week to less than 20% below their 2011 peak closing highs, at -19.06% and -17.80% below, respectively. One definition of a Bear Market is a 20% decline below the peak, so both indexes are considered in a correction but not technically in a Bear Market. Of concern is that some consider one or both of these indexes a leading indicator for the other indexes. By comparison, the S&P 500, NASDAQ Composite, Dow Jones 30 Industrials, and the NASDAQ 100 are -11.47%, -9.35%, -10.08%, and -5.03% below their 2011 peak closing highs, respectively.


S&P 500 Daily Chart Below is the SPX daily chart from April 29, 2011 and the multi-year closing peak of 1363.61 to illustrate the rally peak, decline, and recent trading range.

Noteworthy Closing Prices
Current Close: 1207.25
2011 High: April 29 1363.61
2011 Low: October 3 1099.23
2010 High: December 29 1259.78
2010 Low: July 2 1022.58
YE December 31, 2010: 1257.64
YE December 31, 2009: 1115.10
Market Cyclical Low: March 9, 2009: 676.53

S&P 500 Chart Review
Intermediate Term Trend: slightly ascending 25d avg descending 50d avg since 8-9-11; SPX > both, tenuously bullish
Long Term Trend: SPX descending 10 month ema = 1236 beginning WE 8-5-11, bearish
Key Resistance: 400d avg 1211, Fibonacci 38.2% retracement 1226, trading range hi 1231
Key Support: benchmark 1200, 50d avg 1173, 20d avg 1167, , trading range midpoint 1153
Moving Averages: above 20d, 50d; below 100d, 200d, 400d avgs
Uptrend Line: below since 7-27-11; 3-9-09 closing low of 676.53 up thru 7-2-10 closing low 1022.58
Downtrend Line: below since of 7-8-11, from 10-9-07 closing hi 1565.15 down thru 4-29-11 closing hi 1363.61
RSI 14 day = 64.51 is reasonable, ascending
RSI 28 day = 50.27 is reasonable, ascending
MACD (12,26,9) = +8.20, ascending, multi-year lo 8-10-11 (-19.97); multi-year hi 8-31-11 (+11.42)


Conclusion Once again SPX has rallied and closed above the 1200 benchmark and is currently testing the 400-day average. The consolidation and stabilization continues and grinds along after the crash in early August. An oversold bounce occurred after another severe test of the bottom and support. News-driven corrections downwards and oversold bounces upwards continue to occur within the expanded trading range. The negative USA and Global fiscal, economic, and political uncertainties continue stifling any rally above the trading range. We believe this earnings season rally will continue and the top of the trading range will most likely be tested. 1200 continues as the benchmark for the sentiment boundary between some optimism and significant uncertainties and earnings season has propelled SPX above at least temporarily.
● Fibonacci 50.0% Retracement SPX is now well above Fibonacci 50.0% retracement of 1120.84. The Fibonacci range utilized is from 10-9-07 all-time closing high of 1565.15 down through the 3-9-09 market cyclical closing low of 676.53. Earnings season should maintain the S&P 500 well above.
● 400-Day Moving Average SPX has yet to sustain a rally above the 400-day moving average of 1210, which was initially dropped below on August 4. The S&P 500 has 3 failed rallies at or above and is currently in the process of a 4th rally. Earnings season should provide the boost rally above this benchmark once again.
● Fibonacci 38.2% Retracement SPX has not been able to sustain a rally above the Fibonacci 38.2% retracement of 1225.70 which was initially dropped below on August 4. The Fibonacci range utilized is from the the 10-9-07 all-time closing high of 1565.15 down through the 3-9-09 market cyclical closing low of 676.53. Earnings season will probably provide the impetus to test this level again.
● 300-day Moving Average SPX has yet rally and close above the ascending 300-day moving average of 1239, which was initially dropped below on August 4. On August 31, the intraday peak since the August 4 crash, SPX pinned 1230.71 and the 300-day average was 1230.18 on that day. A best-case scenario during earnings season propels the S&P 500 upwards to a test of this benchmark.
● S&P 500 Outlook The intermediate-term trend indicator is now tenuously bullish. The long-term trend indicator continues bearish. At the present level of the S&P 500, we continue bullish for October, continue neutral to slightly bearish for November and December, and continue bullish long-term (12 months).
● Global and USA Economy Warren Buffet is saying the recovery is proceeding and no recession is ahead. Lakshman Achuthan of ECRI says the recovery has been underwhelming and that an American Recession is ahead. To us, the economic indicators are dismal, but continue bottom-bouncing to-date and show neither much recovery nor a recession. A video of Achuthan's interview and prediction of the recession is here.

Disclosure & Portfolio We have no position in SPX, SPY, or any other related ETF as of this posting. We will so note such positions at the time of a weekly posting, but not any short-term trades, such as intraday or intraweek trades, between the weekly postings.

The S&P 500 has been widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities, it is also an ideal proxy for the total market. S&P 500 is maintained by the S&P Index Committee, a team of Standard & Poor’s economists and index analysts, who meet on a regular basis. The goal of the Index Committee is to ensure that the S&P 500 remains a leading indicator of U.S. equities, reflecting the risk and return characteristics of the broader large cap universe on an on-going basis. The Index Committee also monitors constituent liquidity to ensure efficient portfolio trading while keeping index turnover to a minimum.

USA and Global Economic News and Analysis
Apple (AAPL) financial performance and stock charts
Google (GOOG) financial performance and stock charts
Largest USA tech companies
Microsoft (MSFT) financial performance charts
Intel (INTC) financial performance charts
VMware (VMW) financial performance charts (CRM) financial performance charts
Rackspace (RAX) financial performance charts
Cisco (CSCO) financial performance charts
Oracle (ORCL) financial performance charts
HP (HPQ) financial performance charts
IBM (IBM) financial performance charts
USA failed and problem banks
Largest USA banks
Federal Reserve statistical releases
FDIC quarterly banking profile
JPMorgan Chase & Co. (JPM) financial performance charts
Citigroup (C) financial performance charts
Goldman Sachs (GS) financial performance charts
Wells Fargo (WFC) financial performance charts
Bank of America (BAC) financial performance charts
Morgan Stanley (MS) financial performance charts
S&P 500 (SPX) charts and review
China economic, Internet, and technology news
Baidu (BIDU) financial performance and stock charts
Select news regarding the Universe, Earth, Humanity, Future

Visit Osprey Port News Network!
Apple, Google, Baidu, China, technology, financial system, stocks, markets, economy, science, environment, future

Follow Matrix Markets On Twitter!
S&P 500 analysis, select USA & Global economic news, plus technology sector. 

$ $ $

No comments:

Post a Comment

Seeking Alpha