Diary of a Financier

SPX Premarket Update: Bouncing Off Trendline Support, but Warning of Long-Term Collapse

In Capital Markets on Wed 11 Jul 2012 at 09:14

Before the open today, S&P 500 E-mini Futures (ES/) are up around 1338. Having held 1330 with a rally into the close yesterday, ES 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 holding.

Things are getting interesting here, given the development in longer-term fractals. The weekly chart portends an eventual collapse, with indicators showing bear divergence against the bull pricetrend since 2009’s low. The monthly is still hovering around resistance of a bear channel, which illustrates the secular bear market since 2000. These two reads suggest there’s a real risk of collapse within months to quarters, but the daily chart shows a wormhole higher in the short-term:

ES daily/weekly/monthly- weekly shows bear divergence in both waning momentum (MACD) and an absence of buying pressure (MFI); monthly chart shows the secular bear market in a technically confirmed bear channel.

I’m doing some buying today. I’ll be using some cash to add to certain singlename positions, but the meaningful activity will be in index ETFs. I’m still going to maintain my High Yield Credit singlenames and a pile of cash.

–Romeo

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  2. […] all major fractals (daily/weekly/monthly) are overbought. In addition, reverting back to the 2011 analogue, I find evidence in support of a pullback from these highs: SPY daily (2011 analogue)- at 100% […]

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