As the eleventh hour short term resolution became a reality this week, stocks continued their upwards momentum closing at another new all time high in the S+P 500. In the short term I can see some minor resistance above around the 1750 level on the S+P 500 as depicted in the above chart. The area is defined by the length the market proceeded above it’s previous highs (roughly 20 pts) along with matching the size of the previous rally off the 1626 low into the “no taper” Fed announcement top.
Now since the last major swing low at 1646, the biggest drop has been about 15.5 pts. So it is entirely possible for a pause in the market to retrace back somewhere in the vicinity of that amount, or even twice that amount (30pts), since we have seen a 100 handle move in the S+P 500 in a short amount of time.
Look for support to now stand at those previous swing high pivots, 1729 and 1709 respectively. This market is likely headed to 1775 and probably higher over the coming months, as upside targets on both the Dow and the S+P are defined in this prior post.
I have done a few posts on this price chart over the years, over a year ago I posted a chart highlighting the $900 price level as being the area that would match the size of the previous bull market in this stock, following it’s IPO. The stock price hovered around that price target for about 6 months before breakout out above $1000 on Friday, one of the biggest one day gains in terms of dollar amount, that I can remember.
Unless this stock takes out it’s rising trend line below and shows weakness below it’s 2007 bull market high at $747, I can see no reason to be long term bearish on this name. It’s a tough one to chase at this point and I would advise against it. But it certainly appears as if this momentum will continue.
Lastly we have American Express (AXP), they also reported earnings this week and basically knocked the cover off the ball. This stock has had a great run year to date and is poised to continue that upward momentum into year’s end.
The stock price spent the better part of the summer range bound, roughly between $72 and $78 (6 points). This momentum and energy will likely take the share price to at least $84 in the near term.
Another important piece of information is the fact that as of Friday’s close, the cumulative advance – decline has finally broken out to the upside of it’s 6 month trading range. This bodes well for higher prices in the future.