Thursday, February 4, 2010

Technical outlook 04/feb/2010

S&p 3 year weekly graph
red line 50 week moving average
green line 80 week MA
Purple line 200 week MA
Look how the 80 week MA fits perfectly to the graph.It worked as a support on the first sell off in 2007, which broke through the 50 week MA (red line).
Market recovered, made a new high and 80week MA acted as a support once again forming a Head and Shoulder pattern, and when finally it was broken at the beginning of 2008 it acted as a resistance in the mid of 2008, at the exact point it intersected 50 week MA.
In 2009 , first 50 week MA was broken through to the upside in August, then 80 week MA was broken to the upside in september and we are heading to the 200 week MA , purple line which is around 1200 in S&P.
Well, the perfect fit for my long term BEARISH scenario will be, 50 week and 80 week MA intersection acting as a support to a big sell off, (like this one where 50 DAY and 80 DAY MA's are broken to the downside, showing serious signs of weakening trend) and market rebounding to make a new high as in 2007 and then going back down to the old lows and maybe even further.
I will say it is not a miracle if S&P goes all the way down to 1000 where 80 and 50 week MA's are getting ever closer by the time passes.Bounces from there to 1200 where 200 week MA sits.
Goes back down to 920-940, breaking the support of 50&80 week MA.Rebounds to 1000, 50&80 week acts as a resistance and goes all the way down to old lows.
It looks very beautiful and reasonable.

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