is the head that wears the crown- Status of the US Stock Market- David
Banister May 26 2012
US market is one of very few trying to maintain a long term uptrend Bull
cycle around the world. Most major world indices are in decline, only Germany
and London are also trying to hang in of the major indices.
the rest of European problems continue to spillover and weigh down our
markets in finally cause a flush? Or… will the US stay strong and lead
higher amidst the turmoil?
threat of debt repudiation resonates throughout Europe and has major
headwinds for the Banking industries and otherwise… and it may be hard
for the US market to gain much traction until we find out if there are any
resolutions near term.
Technical picture is mixed. The drop to 1292 from 1422 highs created a 38% fibonacci retracement of the October lows at 1074 and the
March highs of 1422. This is typical for a 4th wave correction after 3 waves
of rally. In addition, we had Mclellan Oscillators
at extreme lows coming into this past week, investor sentiment running at
multi month lows not seen since last summer, and many other oversold
led to a 36 point bounce early in the week from 1292 to 1328, but it had
trouble holding into the end of the week. I was looking for a strong close
over 1322 to help confirm the downtrends lows were in place at 1292, but we did
not get that just yet. Near term we have to see a very strong bounce this
coming week over 1330 on a closing basis or the market will be at risk of a
rising bearish wedge and then another large downleg
to new lows since the 1422 highs. Therefore, Tuesday and Wednesday in my
opinion will likely immediately tell us which way this market is about to go.
have a few outlooks that are valid. One is that we had an ABC correction from
1422-1292 and we are in the early stages of a Major Wave 5 up bullish pattern.
The other is we had 3 waves down, this is a 4th wave bounce, and a 5th wave
to new lows on the move is next. Again, early in the week will be key in my opinion.
are two charts. One shows the Weekly SP 500 pattern and prior pivot points
where downtrends halted and reversed. In each case the candlestick pattern
for the week was inside and above the prior weeks lows and closed higher (White Candlesticks).
This also happened this past week, but I again would like to see higher
closing levels early in the week to confirm.
other chart is a daily chart showing the 1330 barrier we would like to see
crossed to avoid a rising bearish wedge pattern.
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