However we are getting close to Long Term upside and a confluence of resistance is close by. So I put together a post as to what to expect going forward.
First off, chart displayed above is the daily chart of the SPY, which is the index etf to the equities benchmark the S+P 500. The confluence of resistance above is as follows, the blue lines are open gaps from June 2010 trading, the yellow line is the May 2nd high, and of course the green line is the projected upside long term target. So as you can see a third sell-off reaction could be imminent at anytime.
However, I still don’t expect more than a 2-3 pt correction (20-30pts if following the SP 500) until we take out the May high and hit our target. In either case, whether such a reaction starts now or at the long term target, I will be looking for a sell off reaction of a size between the last two sell offs inside this uptrend, and no greater than 13.22pts (or 132 SPX pts). For now I would use the lower rising trend line as support for any such reactions, and in the case of a break below that I would be looking for support at the open gap from 2010’s last day of trading as the MAX downside for any such sell off.
Now once a sell off reaction has completed I fully expect to see the SPX trade up between 1420 – 1470 to finish of a 3rd rally from its March 2009 lows. At that point I would be extremely cautious, as there could be a sharp swift sell off that could take the S+P below 1000 and possibly much much lower. But first things first, we’ll cross that bridge when we get there.
I plan to create another post over the weekend, to outline the longer term trend, what we’ve accomplished since March 2009 and what to anticipate and prepare for in the future, why I believe 1420-70 level should be an area of caution at least.