S&P 500 - August 24, 2009

some charts courtesy of stockcharts.com

Just a quick note

In the weekend post, I showed this weekly chart of the index

I re-iterate and expand on what I said then, this is what I am thinking:

There is a nasty-looking downtrend line that is around 1100 or so. If price advances, it may meet it somewhere between 1041 and 1107 pivot. If price advances without any cooling off and gets to that downtrend line, I will be extremely paranoid holding uninsured/unhedged long positions. If price cools off but does not collapse, then, we will have to reassess the situation.

If we do a bit of sideways, we my hit that zone around, or north of 1041

We just need to see how it pulls back (if it pulls back), and if it extends into that zone around the trend line

If it sells sharply but the breakout point holds and then rallies, I think chances will be high for 1041 to be surpassed on the back of that retest

I shall pay attention to 89 Wk EMA and see how price behaves around that

Here’s a chart of ES futures where I have identified the breakout point with a blue line and a couple of arrows - 1016 on the futures , and 1018 on the cash index (+/- your tolerance deviation points)

Techies are closer to their weekly downtrend line

Technically, NDX is in a better shape as it already has climbed above its 89 Wk EMA, which is now flat. It seems to be bumping against resistance around 1640-1650 area. Same thoughts here as well, if they sell and the breakout point holds, then the retest rally may make a new high, or at least match the current high.

Here’s a 60-minute chart of NDX futures with the breakout point. Future prices are already around the breakout point, but it's the thin hours of the morning, who knows what happens when volume rolls in?


For the day, volume was about average but less than yesterday. Breadth was neutral to positive.

It felt like a typical slow day after a ramp up. Bulls still need a follow through, perhaps a retest and a follow through to fortify the breakout point, at least, for now

IF I wanted to short, I would either start small or wait a bit to see how price behaves around here.

If I were in position from below, it should be fairly simple to plan.

Have a Nice Day!