October market review 15/10/2010

It is once again expiration friday and time for a market review.S&p index closed at 1173.81 yesterday. The market showed great strength past 5-6 weeks, and although my long awaited sign of 20 week MA crossing 50 week MA to the downside occured last time(and still the case), I was very cautious with being short around 1130s.

20 week MA being below 50 week MA shows that the market is still weak technically ,however bulls proved to overcome any technical weakness lately.I closed most of my short positions but as long as 20 week MA stays below 50 week MA , I will keep my final shorts.

During the past month, market broke the big resistance at 1130 and moved above 1150 as well. The only resistances left before the year high 1217 is around 1170(before flash crash), and the 200 week MA which sits at 1196 which provided the resistance to the year high at the time.You can check it below in the sp weekly graph.



For support levels , look at the sp daily graph below.Of course 1150 is the first level with 20 day MA,famous 1130 and 200 day MA 1120 are the next levels to watch.
50 day will cross 200 day MA to the upside pretty soon if things wont change dramatically.Thus, the death cross will be just another false alarm.



Gold is going up without a brake, and dollar is in a free fall against other currencies. Euro/dollar trading around 1.41. It will be interesting to see the reaction of the market when quantitative easing 2 is announced. The market proved to be strong , which I think not because of the fundamentals, but rather due to inflation of prices everywhere.I still believe it is a very fragile market, we will see.