S&P 500 - May 14, 2009

some charts courtesy of stockcharts.com

Index bounced up a little on low volume. Breadth was positive.


Today was very boring. Neither bears nor bulls showed any conviction and majority of stocks just drifted up a bit.


The chart above shows weakness at many levels. If bulls do not get their act together they may embolden the bears to start a serious attack.

Yesterday, I mentioned that I had taken a some profit because index was sitting on the lower boundary of my tested and trusted road map. Today, index bounced up from that line.


In the short term, it is possible that we have seen a small leg of a larger drop, tentatively marked as wave A of minor degree. If so, the bounce that started today may continue tomorrow, especially considering that tomorrow’s OpEx day

Same story with June contracts as well


A sustained move above 912 cash index will make me doubt the bearish scenario, especially if it is accompanied with improving momentum.

Bears have the short term trend on their side. They need a solid break below high of April 17 (875-880) to solidify their case and lessen the likelihood of possible bullish wave counts.

And, yes, there are possible bullish counts, this is one of them


Here’s another


I am not trying to scare the bears. I am just reminding them they’d better show up and drive the index below 875

For now, I will keep an eye on the 900 level and then the 912 level to see if they can cap any bounce tomorrow.

My plan is still the same:

Hold on to whatever short I have with a stop above the high of May 7 (930+).

I have no desire to establish a new long positions here.

Nas100 bounced on low volume as well


This does not look good. First the 21 EMA could not contain the price, now, it is has been capping bounces for two days. If weakness prevails, next level of support is 1308 and then 1283

Watch the Stochastics to gauge the strength of any short term bounce.

Nas100 breadth is showing signs of deterioration as well


Some measures are stretched and may produce a short term bounce, but a lot more than a short term bounces is needed to repair the picture above: either back-to-back days of massive buying or a few weeks of sideways consolidation is what it takes to repair the damage

To wrap up:

Tomorrow’s OpEx day: my plan is to survive it

Today’s bounce on contracting volume does not bode well for the bulls, but bears have not been generating a lot of volume either

Nas100 appears broken and in need of immediate care

Short term trend is down. Mid-term trend is up. Long term trend is down

Resistance is 912 (pivot), 920, and 935 (Jan 2009 top). Support is 880-885 neckline, and the frequently contested 850

I will leave you with this chart


This is not a broken index – Not Yet! But very close

Trade safely!