Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The S&P Goes - So Goes SPXU and UPRO

Stock-Markets / Stock Markets 2011 Oct 24, 2011 - 12:00 PM GMT

By: George_Maniere

Stock-Markets

Best Financial Markets Analysis ArticleAbove my desk I have a big sign that says “the market will always do what the market has always done, misdirect, confuse and confound.” The way the S&P has been behaving since August is proof perfect that this slogan is as true as ever.

For those of you not conversant with the Ultra Pro Shares ETFs Pro Shares Ultra Pro S&P 500 (UPRO) is a triple leveraged fund that seeks a 300% return on the performance of the S&P for a single day. Conversely, The Pro Shares Ultra Pro Short S&P 500 (SPXU) seeks a triple leverage or 300% return on the inverse performance of the S&P 500.


For those of you that read me on a regular basis you know that I was certain back in August that the S&P would break the support line of 1100 and from there would go to 1050 / 1020 and if things got very tight it would go to 960. On October 3rd I was sure that I would be right as I watched the S&P break the 1100 support and hit an intraday low of 1078 before closing at 1100. One or two more days of trading below 1100 would confirm my thesis and I would add to my already overweight position of SPXU. Well I was wrong. Two days at 1100 on the S&P and it began its march up and I was forced to sell at about 1140 and admit that I had been fooled again. Let’s take a look at the chart below.



As this chart will show the S&P kept its march up and about two weeks ago it formed a consolidation area between 1200 and 1220. There it remained for several weeks. The S&P attempted to continue to consolidate last week as it traded sideways in the $1200-$1220 range. On Friday the S&P 500 closed the week out at the highest prices it has seen since the decline that began in August. Buyers, however, remained impatient and only allowed a week or two of rest. This is a good show of strength as the S&P could have easily experienced a deeper pullback and still remained healthy. While I believe the S&P will need to take a more extended breather, (especially with the uncertainty from Europe) it may make a run towards $1260-$1270. This is a key level to watch in the near term as it marks a prior support level from June and the approximate area of the 200-day moving average. If it breaks through the 200 DMA we will rally to the end of the year. While S&P still has plenty of overhead resistance, the rally from its recent lows has been staggering.

In conclusion, I think that Fridays rally to 1138 was less of a rally and more of a short covering. I expect to see a pullback to the 1220 level today but there are other factors involved.

According to the Wall Street Journal, European leaders are nearing agreement on a plan that would see the region's banks raise around €100 billion ($139 billion) in fresh capital, said three people familiar with marathon talks taking place here on Sunday.

I must interject that the great Jesse Livermore taught us that it is not the news that means anything it is how the market reacts to the news that is important.

The bank-recapitalization plan is the easiest piece of a three-pronged bargain that the 17 euro-zone nations are hoping to reach during meetings that began Sunday and will continue through at least Wednesday. There remain disagreements on the other two measures—steps to boost the firepower of the bloc's €440 billion bailout fund and, critically, to deal with Greece's spiraling public debt through a complex restructuring.

German Chancellor Angela Merkel, left, walks with IMF Managing Director Christine Lagarde, center, and ECB President Jean-Claude Trichet during a roundtable meeting of euro-zone members at an EU summit in Brussels on Sunday.

European Union finance ministers discussed the bank plan during a 10-hour session on Saturday. Swedish Finance Minister Anders Borg said on his way out of the meeting they had agreed to the foundations of a plan. Today will be a very interesting day.

By George Maniere

http://investingadvicebygeorge.blogspot.com/

In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent. Please post all comments and questions. Please feel free to email me at maniereg@gmail.com. I will respond.

© 2011 Copyright George Maniere - 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.


© 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