I don’t want to put too much emphasis on the short-term technicals right now since the reaction to the Fed’s bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I’m more interested in the next higher levels of resistance. If we get a rally I’ll be looking for sellers to step in around those resistance levels.
First, here’s a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It’s also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.
If & when we rally I’ll be watching for sellers to step in around the 50-day moving average on the S&P 500.
Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.
I see some resistance around 2250 on the Nasdaq but it’s probably good to run to its 50-day moving average as well.
It’ll be interesting to see how the dollar reacts to the bailout plan. I’m surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?
Signs of life in the short-term trends but they face headwinds from the longer-term trends.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Down | Down | Down |
| Intermediate | Down | Down | Down |
| Short-term | Lat | Up | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
hmmmm, we like that bear flag on the dollar.
BAILOUT = BAD DOLLAR
what’s the best way to play it , puts on UUP?
it’s getting interesting on the dollar. You’d expect the bail out to be dollar-bad, but we’ve just had a credit bubble pop so you’d also be expcting dollar apreciation through a monitary and credit deflation. Is M3 contracting? I’m too lazy to go looking for it but I’d be expecting it. Maybe the latest drop in the dollar is the flag, and there’d be a rush in on a failure to drop further? A few of the asain countres were intervening aswell.
Also uncle sam is getting in on the action, check out:
http://www.itulip.com/forums/showthread.php?p=43766#post43766
Always appreciate the careful analysis and technical cues Mike!