S&P Medium term

This is a discussion on S&P Medium term within the Indices forums, part of the Markets category; I posted this thread on another forum but have not had any replies yet. What do you all think here? ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Sep 6, 2003, 8:03pm   #1
 
UBend's Avatar
Joined Jun 2002
S&P Medium term

I posted this thread on another forum but have not had any replies yet. What do you all think here?

I have to say I have been a little bit confused of late . I have been watching this rally devoloping over the last few months since the low in March, rising by 28.5% to the high of 1015 or so in June. It looked like this was a typical Bear Market Rally but since then we appear to have been in a tight trading range between 1015 and 960. I was preparing myself for a correction to occur and for the index to fall to at least test the lows of October last year. The long term picture is gloomy, I believe, with a huge Head and shoulders in the last 5yrs (Target about 500 on S&P), Poor American economy, Poor global economy and a chart which looks very similar to what happened in Japan. So why does the chart look Bullish??

I thought at first that when the index entered it's trading range of 1015 - 760 that it was a "Rectangle top" and that a downside breakout was imminent. I was all ready to short at about 1015 at the end of August, so I was a bit surprised at the upside breakout on 2nd Sept . So I went back to my charts and books.

It seems that there are 2 or 3 possibilities at the moment :-
1) This could be a genuine upside breakout, in which case we have an immediate target of 1070 from the "Rectangle Top"
2) This could be the beginning of the next leg up of a "Measured move up" in which case the target is an astronomical 1185, or
3) This could be a false breakout and a nasty trap to reel in the buyers before a major fall. (It seems that more than half of "rectangle Top" formations that have a premature breakout end up breaking out in the Opposite direction )

"Rectangle Tops" with an Upside breakout do appear to perform quite well according to Mr Bulkowski in his "Encyclopedia of chart formations" with a 2% failure rate (ie 2% of formations fail to rise by 5%) and a remarkable 91% achieving their target. Also, over 50% will have a pullback to the trendline with an average time to pull back of 11 days.

So, what is going to happen? Is this a bullish sign against all the odds, or are we in for a fall. Professor Didier Sornette who has made a study of herd movements in post bubble stock markets and has been using his analysis to fairly accurately predict the movements of the S&P in the medium to long term(see his website at :-

http://www.ess.ucla.edu/faculty/sorn...asp#prediction

Theblindsquirrel and various other sites have been comparing the S&P to the Japanese market & seem to be suggesting that further falls are not only necessary but inevitable.
The PE of the index is also still at historically high prices, also suggusting that further falls are on the cards. So why is the chart Bullish???

Anyone got any views??

UBend
UBend is offline   Reply With Quote
Old Sep 7, 2003, 11:40am   #2
 
FTSE Beater's Avatar
Joined Feb 2002
Hiya UBend

Hope your keeping well
This is my take on the chart

Click the image to open in full size.

There is resistance at 1050, which is the only thing I can see that will fail the rectangle break-out. There is one more test for it though. It broke out on Wednesday, sat there on Thursday and started to fall back on Friday. If it goes below 1015 on Monday, then I would say the break-out failed and we could be in for a week of sideways movement

Any positivity on Monday and we should be up up and away

HTH
FTSE Beater is offline   Reply With Quote
Old Sep 7, 2003, 6:15pm   #3
 
ChartMan's Avatar
Joined Nov 2000
I see weakness in the bull flag and more than a good chance of reaching target of 1055/1060. 1050 resistance will be the crunch. If the market is strong then it will be penetrated.I don't see it as a rectangle top, but a bull flag.
Attached Thumbnails
spx-7-09-03.gif  
__________________
The views expressed here are my personal views and for your information only. Any expression of likely movement of a share is merely guesswork and is to be treated as such.This information must NOT be used as a basis for making any investment decision.
ChartMan is offline   Reply With Quote
Old Sep 7, 2003, 8:51pm   #4
 
UBend's Avatar
Joined Jun 2002
UBend started this thread Thanks FTSEbeater & Chartman for your insights - I s'pose we'll have to wait to see what happens this week. I still can't decide whether I need to be long or short though. Oh well time will tell.

Yes I am fine Mark - sorry I missed the last traders meet - working I'm afraid - see you again though soon

Bob
UBend is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Scalping vs Medium-Term OrionsFX Forex 4 Jul 9, 2005 3:51pm
UK share ideas for short to medium term growth bencolling Stocks 6 Jul 30, 2004 8:01am
Long/Medium Term Index Review Helenqu Indices 9 Jan 14, 2003 11:52am
Long/medium term winners shelman Stocks 9 Jun 14, 2001 9:48pm
Test: Short Term MA crosses Long Term MA Sharky Technical Analysis 1 Mar 24, 2001 5:11pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)