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TECHNICAL ANALYSIS


Can SPX Handle 1200?

10/27/09 03:53:09 PM
by Austin Passamonte

Here's the near-term to midterm outlook for SPX.

Security:   S&P 500 (SPX)
Position:   N/A

The past 12 months have been one extreme ride for stock market indexes. From the epic crash of September–October 2008 through the grinding plod upward of 2009, it has been a year of market extremes.

FIGURE 1: SPX, WEEKLY
Graphic provided by: TradeStation.
 
The weekly chart view in Figure 1 shows a big inverted head & shoulders pattern: the crown at the 662 zone with neckline resistance around 944. Taking the sum of distance between crown and neckline = 282 index points' width. Adding that sum to the 944 breakout zone = 1226 as an upside price target to come.

FIGURE 2: SPX, DAILY
Graphic provided by: TradeStation.
 
In the near term, SPX has met a price projection of resistance around the 1090 level. Seven sessions in succession have found themselves stuck right there. Increasing volatility in the past days is a clear indication that price will push away soon ... up or down. See Figure 2.

FIGURE 3: SPX, DAILY
Graphic provided by: TradeStation.
 
If "up" is the resolution from here, next stops on the projection circuit would be 1130+ and then 1220+ zones. There is that 1200+ price objective again, a different measure but the same target.

FIGURE 4: SPX, DAILY
Graphic provided by: TradeStation.
 
One last look from a slightly different perspective: past seven sessions since the last breakout ascent have floundered sideways in a widening megaphone pattern (Figure 3). The subsequent break of this wedge, up or down, will confirm what comes next. Look for the closing bar outside this pattern for a strong sign of which way to go next; 1200 is possible, but a sharp pullback is equally probable.



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: 10/28/09Rank: 5Comment: 
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