Confusion… The State Of The Stock Market

1 week up, 1 week down. That has been the trend since the beginning of October. A look at the weekly chart for the S&P 500 is enough to make anyone’s head spin. Last weeks high hit the 38.2% retracement level from the mid-August high’s and immediately turned around.

Both the monthly and weekly charts continue to show signs that the downtrend is still well intact. They are both showing bearish moving average crosses, no divergence in any of the indicators, and strong but extended trend strength on the ADX.

Forecast for this week

The daily chart is showing a nice symetrical triangle, and price bounced off of the rising support line which also corresponds with the short term 61.8% retracement level. The market should trade to the upside in a tighter trading range this week as price makes its way up towards the downward resistance line of the triangle. Expect to see some resistance around 950, and again around 980. A break above 1000 on high volume could signal another strong counter trend rally.

Daily Chart – Click To Enlarge

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Weekly Chart – Click To Enlarge

Monthly Chart – Click To Enlarge

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