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$SPX Outside Day

Posted by tradingpoints.net, May 8 2009, 08:29 AM

$SPX Outside Day

8 May Daily Commentary

The $SPX fulfilled the High Continuation & Reversal beautifully, as the signal indicated continued upside price action following Wed.’s strong close, and a higher probability of a reversal sometime during the day. The market spiked and failed at R2 level just under 931. Sell triggers were elected on pattern of lower highs and lower lows on the smallest time-frame chart would be the earliest indications of a tradable reversal. Conservative sell triggers could have been elected on the 3 min charts @ 921.50 on the $SPX.


Today’s S&P 500 Cash $SPX daily pivot is 912.78, and the weekly pivot is 871.11. Continued price action above the daily pivot is bullish. Prices stay bullish on the 60 min charts with continued hourly closes above the 897 swing low.


Thursday’s trading generated an Outside Day signal for the $SPX. An outside occurs when one day's high is higher than the previous day's high, and its low is lower than the previous day's low. This is often taken as a signal that the market is about to make a move in the direction of the close, but more accurately a break of the previous day’s high or low sets the directional bias for the day’s trading.


Regarding the larger time-frames:

The monthly $SPX chart is bearish and has symmetry resistance between 850 - 872, which has been exceeded. The bears are worried at this point as in the bigger picture, 1014 is the 38.2% retracement of the all time highs on Oct ’07.


The weekly chart is also nominally bullish with a minor break of the marginal weekly highs set in Jan ’09, however, the weekly trend indications remain bearish and the true weekly swing high is counted from 943.85. The current high point of the recent 9 week rally is 253 points, a 38% rally off of the 667 lows and has exceeded weekly and monthly symmetry resistance. The longest rally (time-wise in this bear market was a 9 week 14.5% rally back in Mar-May ’08.


Because of the powerful reversal on the 10th Mar, from long standing key weekly Fib projection / support levels, the benefit of the doubt is still given to the bullish case with continued daily closes > 767.

Updated 15 min, Hourly, Daily, Weekly charts with additional Fib support and projection levels are posted at http://tradingpoints.net



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