The State of the Trend

By: George Krum | Sat, Jun 9, 2012
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With a little help from the rumor mill, those who heeded our advice last week, that a bounce is coming, were able to profit handsomely from the 50+ point SPX rebound. And the kicker is that market internals haven't reached overbought levels yet:

OEX and Barometer

However, before becoming giddy with the prospect of this rally extending for a few more days, let's take a look at some retracement levels. There is resistance at 1330, and a very strong resistance band at the 1340-1360 level. Therefore, the likelihood of momentum carrying the SPX past these levels seems negligible at the moment:

The weekly SPX retracement chart which suggested that support is in the vicinity of 1265-1275, home of the 38.2% retracement level of the July '10 rally, now warns to expect resistance at 1340, which happens to be the 23.6% retracement of the same rally and the 38.2% retracement of the December '11 rally. Source: OT Fibonacci

The weekly Hurst channels are mixed, while both of the daily channels are pointing up and projecting resistance in the same 1340-1360 zone:

Source: OddsTrader

We'll conclude this week's analysis with the daily Trend Oscillator from OT Trend which suggests that last week's rally is fast approaching overbought levels:

In summary, while Euro centric news dominates the media waves, that hasn't prevented the markets from continuing to follow their overbought/oversold ebb and flow, and that is not likely to change just because of the Grexit drama.



George Krum

Author: George Krum

George Krum

George Krum is the author of the "CIT Dates" blog, and the following apps:

OddsTrader - combines the power of Hurst Channels with proper risk and position size management. For a web version see OT Signals below.

Gann 9 - the only financial app that allows users to effortlessly apply the legendary W.D. Gann's tools and methods for trading (including the Square of 9).

OT Trend - helps you quantify and forecast the seemingly random ebb and flow of stock, index or mutual fund movement.

OT Fibonacci - automates the process of applying Fibonacci numbers, ratios and time series to any security.

OT Seasonal - allows you to perform seasonal analysis on practically any security from around the world, and to build long-term forecasts and models.

OT Pairs - pairs trading, one of the most successful hedge fund trading strategies, is now available on your smart phone.

OT Pivots - combines the power of pivot lines with cycles to provide you with concise technical analysis and powerful trading signals.

OT Signals - a web app accessible from any browser, tablet or pc. It gives buy/sell/hold ratings for any instrument from around the world, and defines the trend and support/resistance levels.

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