Saturday, March 24, 2012

S&P 500 - Triple Screen 'Technical Analysis' - Week: 19 March to 23 March, 2012 - Déjà vu ?

Recap: Last week (post here) we called a 'correction' and got it. While the quantum of the correction may not be something to Tom Tom about, the Bears would have woken up from their 5 week Slumber. Was our risky call really brave, or were we plain nuts? Lets study the charts updated with last week's data, to find out.

S&P 500 - End of Month Chart - 23 March 2012  
S&P 500 - Month Chart (closing prices of each month in a line): The long term chart looks good, and in Bull mode. Currently nosing above last year's high, there is no major divergence of price line with the indicator below, as of now. Let's get closer to the action, as below.

S&P 500 - End of Week Chart - 23March 2012 
S&P 500 - Week Chart (each candle is 1 Week's price action): The white channel lines define the Week's channel that we follow, and the 'mode' is Bull here also. This medium term chart give us feeling of  'Déjà vu'. Notice the candle sets, that the three arrows point to. All Bearish Haramis and the first two were bought into, by the Bulls. We are discussing the fate of  the third set. One should have a re-look at how to trade this pattern (we studied it here last). 

S&P 500 - End of Day Chart - 23 March  2012  
S&P 500 - Day (EOD) Chart (each candle is 1 Day's price action): The short term charts as above, have a change in orientation of the yellow 'Day Channel lines' due to last week's price action. This chart unlike the two above are in 'neutral mode'. Price touched the middle of the Week Channel (white) and Corrected to close below the 5 EMA.

Looking Forward: Short term indicator's pointing down, does not make it a 'Correction' of substantial nature.  However before writing off our Bear Call of last weekend, as mere pause, we should look at the three arrows on the Week Chart above. Will the Bulls say 'Déjà vu' or do the Bears get third time 'Lucky' ?