“There is only one side to the stock market….not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation.” Jesse Livermore
In my earlier post (July 22nd) on market I had mentioned that market could find support on July 24th. As you can see S&P found support exactly on July 24th and turned back up.
In my previous post I had also mentioned the importance of S&P and Dow Jones to cross two important figures simultaneously and these figures were 1375 for S&P and 12,961 for Dow Jones.
I had also mentioned that these two markets will cross 1375 and 12,961 by July 27th. So on Friday – July 27th both S&P and Dow Jones crossed these figures simultaneously with a bang. S&P closed at 1386 and Dow Jones at 13,075.
In my post I had also mentioned that once these two markets cross(1375 and 12,961) then S&P will head for 1390 and Dow Jones will run for 13,100. S&P made a high of 1389.19 and Dow Jones made a high of 13,117.
Chart of S&P shown for your reference. You can see S&P is trading in an upward sloping channel.
Now what? What will be the next anticipated move by the market?
There are three scenarios which I anticipate that market will do in the order of probabilities.
S&P could continue its run on Monday without pulling back and find slight resistance at 1399-1400 (logical round number) and then eventually hit my ultimate target of 1405 (mentioned in my earlier post). This can happen latest by Tuesday July 31st and market could put a top again and start drifting lower.
S&P could pullback next few days and test 1375 once again and find support and run back up towards my ultimate target of 1405 and then start drifting lower.
Although I believe market should find resistance at 1405 but as a trader I should keep my mind open and should know that market do things which we do not expect and that is that S&P could break 1405 resistance and head towards 1422 (the high made on April 2nd, 2012).
What the market will do next week we will find out and as a trader we adopt our strategies based on what the market is telling us not what we think market ought to do.
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