Diary of a Financier

SPX Weekend Update: Walking the Tightrope

In Capital Markets on Fri 10 Aug 2012 at 17:07

We just saw a heartwarming comeback in US equity markets on Friday. Down something like 46bps, SPX recovered in the last hour of the trading week (again) to close well into the black. Due to this resilience, SPX has managed to walk a tightrope strung along the all-important trendline resistance to which I’ve been referring:

“I’m following the SPY 30-minute chart closely as a day-to-day guide. The recent intraday breaks above trendline resistance of a rising wedge have me sitting on my hands to wait and see if that resistance can become support after holding on a closing basis.”

It’s hard for me to increase our equity allocation up here. I was hoping SPY would make a material move higher or lower, as either would have prompted my buying. Now, the market has reared a 4-day rounded-top developing on the intraday fractals, and I’m going to have to continue waiting for a convincing signal of direction:

SPY 30-min/daily- clinging to trendline resistance of that rising wedge.

While clinging to that trendline, this float higher brings my attention back to the bear divergence warning cast by the MFI in the daily fractal, not to mention the weekly too:

ES daily/weekly/monthly- daily MFI bear divergence is nagging, especially compound by weekly divergence too.

Either underperforming managers start buying or SPX will retreat to its support levels:

  1. 1390 first support (rising wedge trendline) -0.90%
  2. 1380-70 second support (bull channel trendline) -1.96%
  3. 1370-1355 (bull channel trendline alternate) -2.85%

Volume will back the verdict one way or another. I can’t wait for Monday, as every trading day can seed the new trajectory.

~~~~

Week-end closing prices (4:00 est):

SPX= 1405.87
ES/= 1402.50

–Romeo

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  2. […] tomorrow, so we’re looking onward & downward to subsequent support levels, as mentioned […]

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