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TECHNICAL ANALYSIS


Mission 1100 For The S&P 500

08/31/09 09:41:12 AM
by Austin Passamonte

Near-term market outlook for S&P 500.

Security:   ES
Position:   N/A

When the Standard & Poor's 500 traded to the 660 price levels in early March 2009, rumors of its total demise were rampant and apparently unfounded. The rebound from there to current resting levels has been nothing short of amazing to most if not all market players. Is there no stopping this market at any near-term top? See Figure 1.

FIGURE 1: ES, WEEKLY
Graphic provided by: TradeStation.
 
Should there be a near-term top found, it probably happens that beckoning gap is still open for nigh on 11 months and counting. ES 1100 was a breakway gap in classic fashion that lasted this long and will hold for (at the very least) a couple of sessions longer, and maybe more. In any event, it is inevitable that the gap will fill. When is always the great unknown, but in this case the "what" is certain.

FIGURE 2: ES, DAILY
Graphic provided by: TradeStation.
 
Akin to the NQ charts, the daily picture of ES seen in Figure 2 shows a bullish hammer candle from August 27 followed by a bearish candle to follow. No fewer than three open gaps hang below current price levels, letting in quite the breeze in swiss-cheese manner of support -- full of air pockets and holes.

ES 1005 is the nearest open gap, followed by 950 back at the venerable price magnet formed in triple-top fashion before the July breakout. It would be perfectly normal for a pullback to 1005 and even 950 with no technical damage at all to the overall rally structure. Below there ES 1100 heads to 900 gap in a hurry, with questions about further staying power arising.

Meanwhile, pre-Labor Day week is straight ahead. The light volume drift is likely to get lighter still. We cannot really pound stakes in the ground until that holiday mark is passed, but we may see some jockeying for position before then.



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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Date: 09/01/09Rank: 5Comment: 
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