Technical Analysis : Week 4/10

The S&P500 Index closed at 1091 last week. This indicates a lost of 45 points from the previous week’s close.

The market had a nightmare in last short trading week. The market tumbled down due to plenty of bad news and uncertainties surrounding the market.

Technically, S&P500 Index had plunge below the 20 and 50 days moving average and 1100 level convincingly, indicate that the bearish momentum is forming. The S&P500 will likely to test 1100 again. Failure to establish above the 1100 level will bring S&P500 down to 1050. S&P500 will likely to have further weakness in the coming week as it broke below the 50 days moving average.

The Plunge Protection Team (PPT) went missing in action on both Thursday and Friday when the market experience heavy selling pressure. Trading volumes were recorded a few times higher than most of the day.

Looking at weekly candles, the S&P500 Index is suggest a negative week. The weekly candle shows a solid fat candle pattern that indicates a further weakness in the coming week. The 1050 levels will be a key support level to watch.

Looking at daily candles, we have 2 huge red candles that punch through 2 major supporting moving average. This indicates that a 3rd red candle is very likely in the coming day.

The immediate support levels are S1: 1050, S2: 1025 and S3: 1000.
The immediate resistance levels are R1: 1100, R2: 1125 and R3: 1150.

In conclusion, the market this coming week is likely to go down again due to the fear in the market. Furthermore, the market will unlikely be able to keep up with the high expectation of earnings from the streets. Overall the market does not look very good in the coming weeks. So once again stay alert and trade carefully.

Lawrence Chua
Patterntradertools.com