Wednesday, July 15, 2009

S&P500 Mid-month Update July 15th

S&P500 has rallied higher than I anticipated . I was looking for it to run out steam at 923,but it passed it. It became extremely overbought in short term. The right shoulder has completed and if it won't head lower within next 2 days and violate the 940-950 the Head and Shoulder pattern will be out the window; then the doted black lines will come to play that makes new uptrend channel.

In monthly forecast and my last week post I mentioned we could get a bounce from 200 SMA, and S&P500 exactly did so, as you see the the chart above, it stopped right beneath the 200 EMA as anticipated. If it takes out the 200 EMA and stays there for a couple days it is going to test 1000.
I don't think it has enough steam to reach the 1000, but it's smart to be open to the rare events as Nassim Taleb said in his book "Black Swan".