From the 2/05/09 market commentary.
We have been talking about watching the 850 area as a possible trouble spot for the S&P 500, and as if on queue, that is where the rally ran out of steam. The lower support is still intact, but a wedge pattern in a bear market tends to break down, rather than up.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Looking for a positive, the MACD indicator is giving us another divergence although it is a little too early to say. We saw a divergence during the Santa Claus rally as the S&P made a higher high, but the MACD made a lower high. That told us that the rally may not last.
So, if the S&P 500 breaks down in the next few days, but the MACD indicator can stay above the low reading it made in January, we could be setting up for a playable bounce. Right now we don't know if that low will hold (in the indicator) since the S&P has not made a lower low yet, but it is something to watch if we do sell-off in the short-term.
We have been talking about watching the 850 area as a possible trouble spot for the S&P 500, and as if on queue, that is where the rally ran out of steam. The lower support is still intact, but a wedge pattern in a bear market tends to break down, rather than up.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Looking for a positive, the MACD indicator is giving us another divergence although it is a little too early to say. We saw a divergence during the Santa Claus rally as the S&P made a higher high, but the MACD made a lower high. That told us that the rally may not last.
So, if the S&P 500 breaks down in the next few days, but the MACD indicator can stay above the low reading it made in January, we could be setting up for a playable bounce. Right now we don't know if that low will hold (in the indicator) since the S&P has not made a lower low yet, but it is something to watch if we do sell-off in the short-term.
