S&P 500 analysis for Jan 19-22

What an interesting week it was for the stock market. Here we look at the S&P 500 for the shortened trading week of January 19-22. But first, it was an interesting past week, and shows us a lot about what to expect going forward.

First off, some non-technical notes: Wednesday was interesting; a MASSIVE order of more than a quarter million went through in the S&P minis! That is a notional value of about $12,961,800,00.00!

There are rumors that the market is being kept higher by the Fed...that they may in fact be the mystery buyer of this market. I don't know if that is the case, but either way this market was marched higher in after hours trading during the last few months of 2009 and now intra-day we are seeing aggressive buying come into the market at key technical levels to keep this market in a technical uptrend.

No matter what the reason, price is what matters and here are the levels to watch for the upcoming week as shown on the chart. Key support comes in between 1132-1130 which held off aggressive selling on Friday. A break of that level does damage to the uptrend. Some support comes in at 1128 with further support coming in at 1123.50 and 1116-1114.80. The target for the breakout below 1130 is 1110.

The rising trend line which was broken on Friday (see chart) will act as resistance on the move back higher - on Tuesday this will be between 1140 and 1142 but will increase over time. A push back above that line indicates a move towards the upper trend channel with resistance along the way at 1144, 1148 and then recent highs at 1150. With “nothing but air” on the upside, resistance beyond comes in just below 1154, followed by 1160 and 1168. After this little resistance remains until 1180.

The average weekly true range stands at just about 30 points. Keep in mind it is also a shortened week for stocks due to a holiday on Monday.

CFD trading analysis written by Cory Mitchell, CMT, Vantage Point Trading, for CFDsPros. For information on stocks and real time stock quotes see CFDsPros.

S&P Analysis for Upcoming Week: Jan 11-15

The year started out strong for US stocks, breaking out above the range that had pervaded much of the last two months of the 2009. The S&P also finished at a recent high, closing out strongly on Friday. Volume was not great and throughout the week there were numerous examples of times when the market barely seemed to be open - the futures and many stocks stuck in small ranges with no activity whatsoever. None the less, the bull rally has continued.

Thanks to Friday's quiet afternoon and aggressive close, initial support for this market comes in just above this range at 1141.60 which is also Thursday's close. Further support for the week comes in at 1139, 1136 and 1131-1129.50. A series of lows is collected in this final area. Due to last Monday's aggressive buying off the open, there is little support below this area for some distance, although some support may come in just below 1128. Further support comes in at 1123.50 and 1116-1114.50.

The weekly average (14) range for the S&P is 31.8 points. Volatility has been dropping off significantly and pretty steadily since early Nov (and over the longer term as well). With volume lower, volatility down and much of the gains over the last 5 months coming from gap opens instead of intraday movement, the market seems rather complacent. So far, in the first week of the year, the market tended to open low but then rally into the close for a positive gain. Whether this dynamic continues into this week is yet to be seen.

Resistance has clearly been broken on the upside, and very little stands in the way of further moves higher. The target for the range breakout was 1146 and 1149. The S&P closed at just about 1145. Profit targets are not reversal points, the market could easily keep going, none the less these points can be significant and we are very close to them. With "nothing but air" on the upside, resistance beyond comes in just below 1154, followed by 1160 and 1168. After this little resistance remains until 1180. Intraday action throughout the week will provide additional resistance and profit target levels. Once again keep in mind the average weekly range for this market currently is 31.8 points (both up and down) so a move to these extreme levels is not highly probable with volatility dropping.

The attached chart shows current trendlines and some major levels worth noting.

Cheers,

CFD trading analysis written by Cory Mitchell, CMT, Vantage Point Trading, for CFDsPros

S&P Outlook Going into 2010 - Jan 4-8

In the final week of the year we saw the market continue to break to new (recent) highs above the former range highs, but volume was very light. Thursday, the final trading day of 2009 for stocks, saw aggressive selling into the close with the S&P falling 7 points in the final 25 minutes of trading after another very sedate afternoon. The S&P closed back within the old range.

On the hourly charts we see something interesting. Despite finishing within the old range which has been with us since mid November, we do see a possible uptrend emerging; we failed to reach the range lows but made higher highs. Short-term trend line support comes in at 1104. Respect, and a bounce off that level and a move back towards the recent highs indicates this market is likely to experience a legitimate upside breakout and the reemergence of a bull rally in early 2010.

On the other hand, a move below 1104 and then 1094 indicates a retest of the range lows between 1086-1084. Penetration of that level indicates the breakout higher was false and that this market is highly likely to head lower in early 2010.

Starting in 2010 I expect volume to increase. If this market is to move into a renewed bull rally, volume will need to increase. If volume stays light or even decreases (!?) this market will stay range bound and decreasing volume is likely to sink it towards the range lows mentioned above.

Written by Cory Mitchell, CMT for CFDsPros