| S&P 500 Trend Analysis - 10/20/2006 | ||
| The Dow closed over 12,000, up 0.35% for the week. The S&P 500 Index edged up 2.98 points, or 0.2%, while the Nasdaq Composite Index lost 14.99 points, or 0.6%. | ||
| Long-term perspective: Our perspective has not change. The S&P 500 is now near the long-term channel resistance line. There are two possible scenarios that we would like to consider. 1.The S&P 500 index turns from the channel resistance line and moves down until it reaches the channel support line. 2.The S∓P 500 turns from the channel resistance line and moves down for a few weeks to reset overbought technical indicators, and then the index rally again to retest channel resistance. In this scenario S&P may form a rising wedge along the channel resistance line. You can see the similar pattern (highlighted in red) on S&P short-term chart. In both scenarios suggested above the index should turn down near the long-term channel resistance line. S&P 500 index uptrend from 6/14/2006 has 3 waves structure so far, as shown on the chart at the bottom of the screen. If scenario #2 is correct, S&P 500 index is going to move down for two or three weeks to the level around 1318, and then the market will rally into the end of the year. It will present waves 4 and 5 to complete 5 waves impulse structure. | ||
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| Short-term perspective: Mixed weekly results represent equilibrium between bulls and bears. Neither the bulls nor bears are winning. It might be the warning sign that the trend has peaked or is close to peaking. Technical indicators are still overbought and look very similar to January 2006. | ||
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| Presented by www.thegreedytrader.com Research Group. | ||
Saturday, October 21, 2006
S&P 500 Trend Analysis - 10/20/2006
