Technical Analysis : Week 41/09

The S&P500 Index closed at 1025 last week. This indicates a loss of 19 points (1.8%) from the previous week’s close.

The market had 2 consecutives negative week following last week lost. The disappointing Non-Farm Payroll report pushes the S&P500 towards the major support level, 1025. The market suffers badly throughout the week. The only positive day was on Monday as the market was celebrating the Merger & Acquisition activities.

The optimism and confidence in the market still seems to be very strong. This is due to the fact that easy money had been made for the past 6 months. Many traders and investors are looking into this coming quarter to load up the stock.

While the streets are very confidence in the market, the insiders seem to be selling throughout last few months. Insiders are seen selling their shares rather than scooping up.

Looking at weekly candles, the S&P500 Index is suggesting a downside movement if it can break below 1025 in the coming week. The weekly chart shows that the 2 consecutive negative weekly candles produce a lower low and lower high. The shadow of the weekly candle clearly indicate that the bull was fighting strongly every week but eventually lose out to the bear.

Looking at daily candles, the S&P500 Index looks like it might be starting the week with a positive Monday. This is because the market had been negative for 4th consecutive days. The 5th candle reversal day will likely to happen on Monday.

The immediate support levels are S1: 1025, S2: 1000 and S3: 990.
The immediate resistance levels are R1: 1040, R2: 1060 and R3: 1080.

In conclusion, the market this coming week is likely to be bearish if it can break and hold below 1025 level. The investors and traders will be looking upon the earnings to decide the direction of the market. Beware of the buy the rumor and sell the news of the market. If the investors and traders had been buying the rumor that the earnings will be good, then they will likely to sell into this rally regardless of the earnings reports.

From,
Lawrence Chua