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Stock Market Bulls and Bears Battle Lines Have Been Drawn

Stock-Markets / Stock Markets 2010 Feb 02, 2010 - 10:22 AM GMT

By: Guy_Lerner

Stock-Markets

Best Financial Markets Analysis ArticleNow that the market has pulled back a bit, the proverbial bounce has commenced at the expected levels. Areas of support and resistance are noted on the charts as the battle lines have been drawn.


Key price levels are points where buying and selling are most likely to take place. With over 40 years of back tested data, I have defined these key price levels as a pivot point low occurring at a time when investor sentiment is bearish (i.e, bull signal). These key areas are shown with the red dots in figure 1, a weekly chart of the ETF proxy for the S&P500, the S&P Deposit Receipts (symbol: SPY). The trend channel has been broken. While the SPY has found support for now, I still contend that a better buying opportunity is ahead.

Figure 1. SPY/ weekly

A weekly chart of the Diamond Trusts (symbol: DIA) is shown in figure 2. DIA is stuck in "no man's land". It is neither at support nor resistance.

Figure 2. DIA/ weekly

Figure 3 is a weekly chart of the Power Shares QQQ Trust (symbol: QQQQ). Like SPY, QQQQ has fallen out of its trend channel.

Figure 3. QQQQ/ weekly

Figure 4 is a weekly chart of the i-Shares Russell 2000 Index (symbol: IWM). Looking at the oval at the right hand side of the chart, we note the breakout from the down sloping trend channel that failed at the 62.86 level; 57.80 seems like a better place to buy as this is the confluence of a key support level and the rising 40 week moving average.

Figure 4. IWM/ weekly

By Guy Lerner

    http://thetechnicaltakedotcom.blogspot.com/

    Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

    © 2010 Copyright Guy Lerner - 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.

    Guy Lerner Archive

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