Technical Analysis : Week 27/09

The S&P500 Index closed at 918 last week. This indicates a fall of 3 points (0.3%) from the previous week’s close.

It was yet another week that belonged to traders and speculators. They once again dominated the market action as it was trading according to a technical point of view. This scenario will continue to play till the next round of corporate earnings releases.

The market had a flat to negative week. The market broke below the 900 level on Monday and threatened to break below the 890 level which has held firmly since May 09. The 890 level proved to be too strong a level to break which led to a bounce as bargain hunters picked up the pieces. The uptrend continued on Wednesday into Thursday as more people scooped up beaten down stocks as they were afraid to miss out on this rally again. On Friday, the market decided to deploy the wait and see tactic.

Looking at weekly candles, the S&P500 Index is suggesting a pause to the upside for the coming week. The weekly candle chart shows a Hammer pattern on a correction trend. This translates into a higher possibility that the market will go sideways with a chance of shooting to the upside.

Looking at daily candles, the S&P500 Index looks like it will have a pause or a down Monday. The daily candle shows a Doji, which signals the end of Friday’s run.

The immediate support levels are S1: 900, S2: 880 and S3: 850.
The immediate resistance levels are R1: 925, R2: 950 and R3: 1000.

The Dollar Index (DXY) had hung on to the 80 levels in spite of all the gloomy news regarding the depreciating dollar. The fall of oil prices is likely to lead to the strength of the dollar.

In summary, the market this coming week should be going sideway to the upside. However if the employment data sucks big time, then the market might just sell-off big time too. The key levels to watch are 890 for the downside and 930 for the upside. Oil price will also be a crucial factor that will influence the market. Once again stay alert for the short week and watch for a possible rally on Thursday as America goes into a three-day weekend before its biggest holiday, Independence Day.

From
Lawrence and
Conrad