I received a good question today in the comments:
Does the break above Oct. 13 on the S&P change your views on a move down into Wednesday...or are we up to 1200 before a short and sharp reversal...in your opinion.
The reader is referring to the fact that the S&P hit 1185.53 intraday today, about a point above the high of 1184.38 on October 13. He's wondering if this is a break out. For the record, here are the highs over the last several days:
Mon 18-Oct-2010 1185.5300
Fri 15-Oct-2010 1181.2000 Thu 14-Oct-2010 1178.8900 Wed 13-Oct-2010 1184.3800
Is this a breakout? The answer is: maybe! Let's go back and review the move in the S&P in comparison to our expected Gann resistance levels. We saw a low of 1010.9 in July 1. From that level, here are the initial anticipated Gann resistance levels:
90 degrees: 1096.6120 degrees: 1125.2180 degrees: 1182.4
Let's examine the highs from July 13-16:
Fri 16-Jul-2010 1093.8500
Thu 15-Jul-2010 1098.6600
Wed 14-Jul-2010 1099.0800
Tue 13-Jul-2010 1099.4600
As you can see, 90 degrees proved strong resistance over several days. From there, the S&P pulled back to 1057 before encountering resistance at 120 degrees (1125.2) on the highs from August 2-10:
Tue 10-Aug-2010 1127.1600
Mon 09-Aug-2010 1129.2400
Fri 06-Aug-2010 1123.0600
Thu 05-Aug-2010 1126.5600
Wed 04-Aug-2010 1128.7500
Tue 03-Aug-2010 1125.4400
Mon 02-Aug-2010 1127.3000
As we know, the S&P was rejected from the 1125/120 degree level, and bounced all the way back down to 1039 in late August.
However, it made another assault on 120 degrees during the highs of September 13-16: Thu 16-Sep-2010 1125.4400
Wed 15-Sep-2010 1126.4600
Tue 14-Sep-2010 1127.3600
Mon 13-Sep-2010 1123.8700
This time, the S&P powered through 120 degrees and now is wrestling with 180 degrees (1182.4) as shown above. All of which is a long way of saying that I don't think the S&P has broken out of 1182/180 degree resistance yet. It could. Or this resistance could hold and we'll see stocks correct.
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Appears we get hit for a few days here now...after AAPL and IBM. Is your target around 1125 to 1130 for this pullback. Seems like a big amount, but I think that is what Terry Laundry is suggesting.
ReplyDeleteWhile AAPL is getting smoked in the after hours, let's wait and see what direction the next move takes before we worry about price targets for the next move.
ReplyDeletePrice targeting is very complex. I look at Gann, Fibonacci, trend lines, moving averages, gaps, top/bottom support, bottom/top resistance, price by volume, etc.
PosSiz,
ReplyDeleteDepending on the depth of this selloff, will that help indicate if a new high is in the cards. Seems like we would really need to get hit hard in the next 2-4 days for this market to not make a short term new high (above 1185).
Is there a level/decline in the S&P that would make you inclined to believe that Oct. 18th was the top. Thanks
We have trend line support at 1150 and rising about 1.5 points per day.
ReplyDeleteThe 1 month moving average is at 1154.8 and rising slowly.
45 degree Gann support from 1185.5 is 1145.6.
I would be surprised if we did not test these levels. If that support holds, we could well start a climb that takes us above 1185.
If that support fails, I expect there's a good chance we fill the gap at 1110.