S&P target of 1405 was given on Sunday, Aug 5th. S&P hit 1407 on August 7th. Next three days S&P went on sideways action. However, late Friday, market suddenly started to recover and closed positive. From time to time trader has to see which market is giving indication of the future direction. On Friday it was Dow Jones which, closed at 13,208, is telling me that market wants to move to the upside after this consolidation rather than going down. The rule is that market moves in the direction of the earlier trend after consolidation.
Therefore, in my opinion market this coming week will move to the upside and will break the narrow range which it did form last three days of trading. And I also expect a Big move soon and it should be to the upside. S&P on Friday closed at 1405.87. It would have been nice if S&P had closed above 1407 but it did not. So there is still a chance of market correcting to the downside. If I have to bet I would bet for the market moving up rather moving down.
The resistance above is 1407 and then 1422 the high of early April 2012 and then 1435-1440. By end of this coming week market could get overbought. So caution is advised.
History repeats itself but sometime in opposite direction. On August 12, 1982 Dow Jones dropped to 776.92 – the same price point of 1964. But stock market had a friend in White House. On August 17th, 1982 stock prices exploded upward. Will this be the case again this week? Or the market would form the reversal pattern, which the market does from time to time (mirror-image), starting August 17th. I had mentioned August 17th in my earlier post too. Markets tend to do funky things on its major anniversary dates as all Markets have good memory. Markets move in the direction least expected.