Diary of a Financier

SPX & DXY: The Long and Short of It

In Capital Markets on Tue 7 Jun 2011 at 17:35
  • Updated outlook & charts.
  • SPX- Short-term bearish; Intermediate-term bullish; Long-term remains bearish.
  • DXY- Long-term bullishness waning.

Short-term bearish.  Note the Prime Meridian that’s developed at 1215.  This will prove a significant level again in the future (be it 2011 or the next crisis).  Also, note the classic Cup & Handle breakout from which SPX is mean reverting.  That formation lifted SPX out of its post-QE1 muddle and into a QE2 spaceshot–illustrated here in the only market that matters, the S&P 500 E-mini Futures (ES/1):

ES/1 daily (extended)

When I zoom in a little tigher on that daily charts, I find SPX having closed last night upon a Fibonacci level, which uses the SPX low of the [post-QE1] summer 2010 as the full retracement.  Again, in my eyes, that low the launchpad of the synthetic QE2 rally:

ES/1 daily (zoom with Fibonacci levels)

Intermediate-term inspires bullishness.  The weekly S&P 500 ETF (SPY) chart that has me expecting an eventual extension of our rally up to the March 2008 resistance at 1425.  Note the bullish Moving Average cross in this weekly chart; we’ll see if indicators can hold support:

SPY weekly

Long-term I’m still irked by how many charts I’m compiling that’re negative for stocks.  I don’t like talking about the long-term because of a sensitivity to initial conditions, but my long term US Dollar (DXY) bullishness is also waning, per the monthly chart:

DXY monthly

–Romeo

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  1. […] about the S&P 500, I thought I would reiterate my outlook. In the beginning of June, I stated my short-term bearishness with first support around 1260. Check. Intermediate-term, I expected a […]

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