Diary of a Financier

SPX Intraday Update: Symmetrical Triangle Resistance

In Capital Markets on Thu 5 Jul 2012 at 11:17

Quick intraday update on the S&P 500 (SPX). Everything’s a bit screwy lately, with the holiday-shortened week decimating volume, yet a busy macro calendar prompting power-moves–particularly in FX markets. SPX is at another junction, so I wanted to elaborate.

Intraday, SPX sits at trendline resistance of a symmetrical triangle (SPX ~1370/ES ~1368). This is an ambiguous classical construction, but I notice the same pattern in the 2011 analogue, which warns of a short-term SPX pullback to 1st support <1350. The vote for a pullback is echoed by an overbought stochastic too:

ES (daily)- at symmetrical triangle resistance, buy on pullback (or material breakout).

I maintain my intermediate-term bullishness for a number of reasons. Among these reasons, the 2011 analogue suggests SPX will resume a cyclical bull rally once it hits 1st support. I’ll start putting cash to work there, buying increasing stakes if we dip further. The longer-term classical pattern governing SPX right now is a bear rising wedge, whose trendline is a safety-net 2nd support between SPX 1320-30. That wedge’s ultimate resistance target is up around SPX 1400:

ES (daily)- ST & LT bear rising wedges frame the retracement bounce, similar to prior corrections in 2009, 2010 & 2011.

I’m taking the news as it comes. The fundamentals seem to be changing still, with railroad and housing data migrating toward my thesis of a cyclical bull recovery. Analyst have all pared their 2q12 expectations, and management teams have lowered the bar for 3q forecasts. Nothing like a little upside surprise to juice equities a bit going into mid-summer.

–Romeo

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  1. […] Europe seems to lack a plan for reflation in the near future.  This all coordinates well with my read on equities, which should pullback here as […]

  2. […] latest prose update on SPX can be found in yesterday’s intraday […]

  3. […] is now bouncing off my first support, a trendline from the shorter-term wedge that can be found in analogues to 2009, 2010 & 2011: ES daily- trendline support (1330 low) of the rising wedge is […]

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