Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

How Far Can the Stock Market S&P Index Slide?

Stock-Markets / Stock Index Trading Jul 13, 2009 - 04:48 AM GMT

By: Seven_Days_Ahead

Stock-Markets

Best Financial Markets Analysis ArticleThe Technical Trader’s view:



WEEKLY CHART

The full drama of the sell- off is clear.

And the double attempt to break down through the 767 pivot that failed which establishes a massive support beneath the market even though there is no clear Bottom formation beneath the market - yet

Now look closely at the rally.

We can’t help but note that if the market can find support and push back up through the diagonal joining the two highs then a massive Reversal is in prospect. But, for the moment, that is conjecture.

The recent pull-back has excited the bears yet the Prior High at 872 looks important...

 

DAILY CHART

This day chart has a neat Head and shoulders Reversal in place.

Note the minimum move implied is as far as the Pivotal low at 820 and coincides with a fib extension.

But the bulls (which we remain in the medium-term) will note the importance of the horizontal support from the prior High at 866 (the equivalent continuation support is close at 872). That has yet to break.

Anxious bears should wait for a break down through 866 before getting short - or, alternatively, use a rally back to set shorts close to the Neckline with Stops just above.

 

The Macro Trader’s view:
A solid rally which began in March and extended into June suddenly halted, and over recent weeks has corrected lower. Hopes that a stronger-than-expected June non-farm payroll report was a sign of economic recovery, gave way, to fears the Fed would tighten interest rates sooner than expected as the month progressed.

Thereafter, traders began searching for any evidence that would support their anxiety that the tentative recovery signs were no more than a false dawn rather than the start of a long march out of recession

But where is the evidence for the recent rush of pessimism?

Ok, July’s non-farm payroll was worse than expected, but the trend is clearly improving. But until the June report, payrolls had been declining at a rate of 550K – 640K per month and there is a clear deceleration over the last two months of job destruction.

Additionally, the two ISM surveys, though still below the crucial 50 level, continue to improve with the non-manufacturing survey released on Monday standing at 47.0.

In the housing market data has yet to turn, so far only pending home sales are up, where as new and existing home sales continue to decline.

So in essence the economy hasn’t lapsed back into recession, it continues to emerge from it even if a return to growth hasn’t yet actually begun. That leaves the S&P balanced on a knife edge.

As Q2 earnings data is released over the coming weeks, market direction will be dictated by the strength or otherwise of corporate profitability and with Q2 GDP due out also this month, traders may receive a clear directional steer.

We judge the jury is out as far as stocks are concerned. We continue to expect the US economy to emerge from recession during the course of this year and start growing again late Q4 2009, or early Q1 2010. As soon as traders feel convinced of that scenario, stocks could shake off their current hesitancy and resume the rally, but much depends short/medium term on the upcoming earnings reporting season.   

Mark Sturdy
John Lewis

Seven Days Ahead
Be sure to sign up for and receive these articles automatically at Market Updates

Mark Sturdy, John Lewis & Philip Allwright, write exclusively for Seven Days Ahead a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our subscriptions.

© 2009 Copyright Seven Days Ahead - 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.

Seven Days Ahead Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules