Monday, September 8, 2008
Weekly Analysis of US Markets
Last week there was big move in the US Markets, the S&P 500 swung about 86 points. There were rallies and then crashes and so many things happening - vindicating what Bush said some time back - wall street behaving like it is drunk.
The close of last week saw a recovery when the crash sent markets into short term oversold zone. Then, the US govt bailing out the mortgage twins news after the weekly close has made ripples throughout the world markets and poor (yes, poor) traders are celebrating like .... what they, actually, should have been lamenting. Well, that's the irony but I put it like this that there had to be some catalyst after the oversold Bear Market Rally which could give a new chance to short to prudent traders.
Looking at the weekly chart of S&P 500 Future, it has jumped overnight from 1242 to 1278 !!! (the latest green candle is of this week). However, speaking of last week, it almost tested July low and closed at about 1242.
Today, the futures have opened gap-up and if this euphoria continues, the next resistance comes at the 34 Period EMA and 200 Period SMA near 1330 (Please see carefully that there might be a negative crossover of these two moving averages). The 34 EMA is red curved line and 200 SMA is small purple curved line. However, I don't think S&P 500 can go to that level. In fact I am still bearish on this fierce rally - a typical Bear Market Rally. Also, the gap-up opening is currently being resisted by the 13 Period EMA (see the green curved line).
Some chartists can also interpret it as a formation of Double Bottom. If this is the case then as I said above, there can be a test of 200 SMA and 34 EMA.
The Dow Jones Industrial Average Index Futures chart (not shown) is also presenting identical formation.