Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

S&P 500 Weekend Update: Technical Takedown?

By

To highlight the importance of holding the uptrend line, look no further than the fading DeMark buy setup in the weekly bar chart.

PrintPRINT
Holiday weeks are typically lazy and full of directional drifts that tend to move upward. The key word here being "tend."

This week started like your average holiday week with the S&P 500 (^GSPC) drifting above the key 1363 level on Monday and Tuesday and higher yet into and out of the mid-week American celebration. But the lazy, low volume "float" finally caught up with the index, causing it to slip intraday Thursday and gap lower on today. Jobs, anyone?

This move lower begs the question: Does the combination of low volume and holiday make this drop much ado about nothing? For answers, let's turn to the technical charts.

On the near term daily chart using 30 minute bars, you can see that the index formed a two day double top on Tuesday and Thursday and broke down and out of the formation with the gap lower today. This breakdown measures to 1350ish, which is right on top of the large gap created by the European Summit bailout news. I would venture to guess that this gap gets tested sometime soon.

On the daily bar chart, a confluence of support can be found around 1335-1340. This confluence includes lateral and uptrend support, as well as the 50-day moving average (or DMA). A sustained break down through 1335 would likely spell further trouble for the index.

To further highlight the importance of holding the uptrend line, look no further than the fading DeMark buy setup in the weekly bar chart. The buy setup recorded four weeks ago, so the 1 to 4 bar reaction period will end with today's closing bell. Now this doesn't mean that the move higher is over -- it just means that investors need to be more mindful of technical levels and risk allocations over the coming weeks. It could be choppy. Trade safe and have a great weekend.

30 Minute Bar Chart:


Daily Bar Chart:



Weekly Bar Chart:


Editor's Note: Andrew Nyquist is an independent investor based in the Minneapolis area. This article originally appeared on his investing and economics site, See It Market.

Twitter: @andrewnyquist
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE