The Open E Cry Market Outlook – May 17, 2004
by: Rick Tomsic
Extreme Makeover?
In our last report we talked about how the S&P 500 Index had been trading in a range and was projected to breakout of this range and increase volatility. The break of 1104 set this process in motion to the downside. The S&P 500 Index has dropped to a low of 1076 below the 1087 prior pivot but still above the old 1065 breakout area. The previous breakout area at 1065 is now very important. A break of this level on a closing basis would provide the S&P 500 with an extreme makeover in the form of lower prices. Recall that prior to the breakout at 1065 the S&Ps had traded in a range between 1015 and 1065. Therefore, a close below 1065 would again target the other side of this old trading range. The upside pivot remains 1104. Since the break of this level the S&Ps retested this area twice. Each time the bears turned the bulls back and forced prices lower. Volatility has already increased and a break of 1065 will take it up another notch.
Market Outlook
Where does the market go from here? The S&P 500 has broken down by violating the 1104 pivot area. This is now the key upside pivot. As long as the S&Ps stay below 1104, the path of least resistance is lower. A break of 1065 would increase volatility and produce even lower prices, targeting 1015. At a minimum, the S&P are in a range between 1065 and 1104. We would remain aggressive on the short side until 1065 is tested and proves it can hold.
Have a great week trading.
The Open E Cry Market Outlook 5/17/4
Started by
TTHQ Staff
, May 18 2004 09:44 AM
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