The last couple of months have been tough for both bulls and bears, it seems both parties have been exerting relatively equal strength and the result has been a sideways market.

For us, we're in cash now as the market works on making a decision as to which way it's going. If the markets break down further from here, that'll be confirmation of the new down phase beginning.

At this point it seems that the bears do have an edge but it's not a done deal and I wouldn't rule out another pounce by the bulls just to create a little more doubt.

The VIX seems to have found support at 25 and finished strongly on Thursday, however more work is still needed to say that the market sentiment has finally changed.

On to the analysis..

SPX Chart - Bigger Picture

The bigger picture is still showing a sideways pattern although the weak finish to the week has had the linear MACD begin to turn. We could be seeing the beginnings of a down phase here.

SPX Chart - Shorter Picture

The shorter picture seems to be following the head and shoulders scenario discussed last week. A break below 880 will be confirmation that we have in fact seen a head and shoulders top and the target region becomes 800 - 820.

Note, we did close the week below the 50 DMA again, although this happened on low volume and so it could easily reverse now. Also note that the linear MACD was about to turn higher and then Thursday's weakness opened the door to the potential of a bearish break in the week ahead.

For the week ahead, support on the SPX is 880 - 900 and resistance 930 - 950.

NDX Chart - Shorter Picture

The Nasdaq seems to be putting in more of a double top rather than a head and shoulders here and the fact that it reversed quickly after approaching 1500 during the week means it is vulnerable to further falls. The key now will be the 50 DMA, which also coincides with support around 1420.

Unlike the end of May, the MACD took has taken a sudden turn lower and now has potential to continue lower. It all depends on how the market responds in the week ahead.

At this point the gap down on open from Thursday might get filled before this one finally breaking down, time will tell and we'll wait for clarity from the market before entering a position again.

For the week ahead, support on the NDX remains at 1400 - 1440 and resistance at 1500.

The VIX Picture

The VIX found support around the 25 level midweek and finished higher by the end of trade on Thursday. The 50 DMA is now the next target at around 31, if we get a close above that a change in sentiment will be in the air.

Notice the MACD wanting to cross higher here, if it goes higher the bears have a chance to gain control in the markets, although while it stays below zero, the bulls remain in control.

The VIX measures the premiums investors are willing to pay for option contracts and is essentially a measure of fear i.e. the higher the VIX, the higher the fear in the market place. It tends to move inversely with the markets.

Performance

We're using a starting capital of $5,000 for each market and allocations are based on 25% of this or the remaining balance.

Quote of the Week:

The quote this week is from. Denis Waitley, "Life is the movie you see through your own eyes. It makes little difference what's happening out there. It's how you take it that counts."

Feel free to email me at angelo@stockbarometer.com if you have any questions or comments.

If you are receiving these alerts on a free trial, you have access to all of our previous articles and recommendations by clicking here. If you do not recall your username and/or password, please email us at customersupport@stockbarometer.com. If you are interested in continuing to receive our service after your free trial, please click here.

By Angelo Campione

Important Disclosure
Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.
Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.
In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.
For a complete understanding of the risks associated with trading, see our Risk Disclosure.

© 2009 Copyright Angelo Campione - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Comments

Post Comment (Moderated)

Subject:

Name:

E-mail address (will not be published):

Comment:

(Note Commenting Issue: If after Submitting you are returned to the Main Index Page then due to site caching your comment has not been accepted. Solution - Click the Browser Back Button to the article page and Press PAGE REFRESH (you should see the message "You are not authorized to carry out this operation") Now re-enter your comment (ignoring the notice) - If all's well then you will remain on the article page after submitting, a moderator will check and authorise the comment. Alternatively EMAIL to comments @ marketoracle.co.uk , quoting the article number.

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2010 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.