<font color=red>2001 MAR 05 SPX Analysis and Thoughts about "The Bottom"
Hope this message finds you well, and that you had a good weekend.
This morning, I am pondering the 2B test of bottom setup that is now in place on both the daily chart of the S&P 500 Index and the March S&P futures.
S&P Futures: ottographs.com
S&P 500 Index: ottographs.com
Both of these charts have filled out the prerequisite of breaking the old low by a touch. That happened last Thursday. On Friday, both actually made an "up" day, a day with a higher low and a higher high relative to the one before.
In order to confirm a true reversal, what we now need is a strong thrust to the upside, to demonstrate that the sellers are out of the way, and that power has returned to buyers. So far, the market has just lingered here this morning, so we shall see. A first indication of upside potential would be a decent break of Friday's high to the upside.
For clues, we will be watching the 45-minute S&P futures chart. Right now, it is in consolidation mode going nowhere, and a dropping ADX confirms lack of directionality. When this consolidation is done, a new move will begin, and if there is to be a move up, the first resistance is at 1250 overhead.
ottographs.com
Ultimately, resistance is at 1280 on the March S&P contract and is provided by three points: the January 3 low, the high of the recent trading range, and the 20-day EMA overhead.
Should the S&P manage to make the reversal, we would look for an idealized trajectory to make a low risk entry, for the first move up to test 1250 might be a fakeout. Using this setup, we force the market to show us the money on the first pullback AFTER a break to the upside.
ottographs.com
Should it turn around here on this 2B test of bottom set up on the daily chart, the world is not totally "saved" - yet. Should the bounce fail at 1280 or so, it would mean that the neckline in the much bigger picture, the one seen on the weekly chart of the SPX, is serving as big time resistance, and that this is a micro-failing bounce, as the neckline so far seems to have been broken enough to have a reasonable probability of being more than just a "poke".
ottographs.com
That's all for now. I'll do an update of the Nasdaq 100 Index later.
Teresa |
