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S&P, Gold and Dollar
In my last post on market analysis I had said:
“Last week S&P hit the target of 1628 and closed at 1633.70 It is now expected that S&P will go through consolidation period. Since S&P is way overbought so any significant pullback towards 1610-1605 or 1590 will not be a surprise. However, if S&P breaks 1641 then will continue its up move towards 1655-1657 level. There is big move coming in the market and this could happen on Tuesday May 14th. The direction of this move is unknown. After this big move market is expected to go on sideways for next two days and then rise again on Friday.”
The big move did come on Tuesday, May 14th and then market went on sideways action for two days and and then on Friday S&P rose again by 17 points and closed at 1667.47
Based on the move of last week I believe S&P has set itself for much higher targets which is as high as 1750. Right now it is not clear if S&P will move towards 1750 non-stop in parabolic move or will take a break after moving 20 plus points from Friday’s close of 1667.47
There are three scenarios and one of these is expected to play out in coming days.
Scenario One
One scenario could be that S&P starts out with pullback on Monday May 20th, gather energy, moves up for next two or three days, pulls back on May 22nd and May 24th and then rise upward till May 27th. In this process S&P is expected to travel 20 points from the Friday May 19th close.
After this 20 points move to upside, S&P declines significantly till July 17th-20th . The target will be 1625 which will be about 60-65 points decline and then starts its journey to the upside. Or after making a temporary top on May 27th, S&P declines till June 7th and stops at 1655 level which will be about 30-35 points drop. After this 30-35 points drop S&P starts rising upward till July 17th-20th and hit 1725-1750 level.
Scenario Two
Another scenario is that S&P after covering 20 points from Friday’s close take a breather and pulls back only 15-16 points from the high made around May 27th and then continue upward till mid-July and then take a plunge and continue its decline till October 22nd just like it happened in the year of 1957.
Scenario Three
Third scenario is that S&P continues its parabolic rise towards 1725-1750 by June 7th-10th and then declines sharply towards 1625 till September and then reverse to the upside but fail to take out the high made during mid-July just like it happened in the year of 1948.
Which of the above scenario will play out is not known. Only God knows better!
Gold is trading at 1347 and If Gold breaks 1320 it will drop to 1250-1200 and this can happen by mid-June which could coincide with S&P making a top and Gold making a major bottom.
Dollar is trading at 84.31. Break of $84.60 could take dollar as high as $89-$90
S&P Update
Last week S&P hit the target of 1628 and closed at 1633.70 It is now expected that S&P will go through consolidation period. Since S&P is way overbought so any significant pullback towards 1610-1605 or 1590 will not be a surprise. However, if S&P breaks 1641 then will continue its up move towards 1655-1657 level. There is big move coming in the market and this could happen on Tuesday May 14th. The direction of this move is unknown. After this big move market is expected to go on sideways for next two days and then rise again on Friday.
S&P Update
Last week I had mentioned that market will be choppy till May 1st and then it will move up.
Market did exactly. It was up and down till May 1st and then on May 2nd and May 3rd S&P moved up significantly and closed at 1614.42.
Now S&P is expected to move up further towards previous mentioned target of 1625-1628. I had given this target many months ago (you can read about it in my previous post).
May 9th-10th is Solar Eclipse and market has tendency to reverse its direction on such occurrences. However, the probability of market reversing its course this time is not that high.
It seems to me that market will take breather after hitting the above target. What it will do next is not clear at this moment. However, if market continues its uptrend after closing above 1625-1628 then target of 1650 and 1680 will trigger.
If any significant pullback occurs then it could be during last week of May.
So traders need to watch for the clue during this period to know what market wants to do. Market usually gives lot of clues about its next move but only God knows for sure.
S&P Update
Last week S&P touched 1592.64 and then pulled back and closed at 1582.24. Some stocks did recover from the lows but the strength was not strong enough. (Please read my previous post).
This week market looks choppy at least till May 1st. The resistance above is 1592-1595 and then 1597 the high made on April 11th. It is important for S&P to not only cross 1597 but with good volume for continuation to the upside target of 1621-1625. The support below are 1565 and 1540.
S&P Update
After making high of 1597 (1595 was mentioned in previous post) S&P did retreat and made a low of 1536 on Thursday April 18th.
I had sent out email on Wednesday April 17th that market is expected to bottom soon – probably by Friday April 19th. It looks like market has indeed bottomed and should rise again in zig-zag fashion.
There was too much damage done in this recent fall, therefore, market strength would not come back right away but rather gradually. What I expect from S&P is to make lower high and higher low and then breakout above 1597 and towards 1621-1625.
So the way I see S&P doing its thing in coming days is to rise from the low of 1536 upward towards 1570-1578 or even 1590 range and then pullback towards 1560, then rise again and make another attempt to break 1597. In this process the strength in the market should come which will be evident in lot of stocks going up on daily basis rather than just 50 75 cents.
For now two important dates to watch are May 8th and May 13th. We will know what market will do during this period as breakout could occur on one of these dates and market continue its upward journey till June 22nd. June 22nd is also the date to look for the clue.
June is far so for now we need to just concentrate on April and May.
S&P, Dow Jones and Gold Update
S&P made a high of 1597 on Thursday, April 11th. On Friday it retreated and closed at 1589. S&P may find itself stuck again in the range of 1595-1610 and then break upwards towards 1625-1630. 1625 target in S&P was mentioned long time back. Dow Jones target of 15,000 was also mentioned way back and it has finally arrived – almost there.
Traders should watch April 25th (Lunar Eclipse), and May 10th (Solar Eclipse) for the clue. Markets have a tendency to reverse its directions during lunar and solar eclipse. The minor support level for S&P is 1565-1567 and very strong support is at 1540 level.
Dow Jones may find itself retreating after hitting 15,000 this week as it is one big round number. It could pullback to 14,635 level and then rise again and attempt to break 15,000. If Dow Jones breaks 15,000 on second attempt then 16,125 is the possibility. On what date these targets will hit only God knows.
Gold dropped big on Friday and closed near 1500. It could find itself going down further towards 1395 and there is a possibility of it dropping to 1250 level.
Understanding Inside Day – FFIV
An inside day is a candlestick formation that occurs when the entire daily price range for a given stock falls within the price range of the previous day.
An inside day is often used to signal indecision because neither the bulls nor the bears are able to send the price beyond the range of the previous day. If an inside day is found at the end of a prolonged downtrend and is located near a level of support, it can be used to signal a bullish shift in trend. Similarly, an inside day found near the end of a prolonged uptrend may suggest that the rally is getting exhausted and is likely to reverse.
On Thursday, April 11th, 2013, FFIV made a high of $76.76 and low of $72.96. On Friday, April 12th, 2013, FFIV made a high of $75.84 and low of $73.86. On Friday, FFIV whole trading range was inside the trading range of Thursday trading range. Therefore, FFIV formed an inside day on Friday. If in coming days FFIV takes out the high of $76.76 then it will trigger a buy signal. Chart of FFIV shown below.
Understanding Inside Day – FFIV