Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Thursday, September 23, 2010

Make or break retest is here...

Stock Market Technical Analysis

Click on above images to enlarge
After a couple days of pullback the S&P has come back down to retest the upper band of this summer's  horizontal trading range after breaking up through it 2 days ago. This can be seen in the upper chart cluster, Row 1.  If the upper blue line holds as support now we have a bonafide breakout.  If it falls back down into the blue channel, S&P 1040 will become a magnet pulling us back down to it.  In row 2 of the upper cluster, we see that if the S&P breakout line holds then the VIX will get turned back down when it is near its upper  blue channel line, which would allow the bulls to take control next week.  If the S&P slips through the blue S&P upper band this will cause the VIX to break out of its blue channel which would earn the #3 Sell signal on the stock market. 

In the lower chart cluster, row 1 chart 1, we see that tomorrow is also make or break day for the 5/10 moving averages, either the market sells and the red 5 will pierce down thru the 10 MA line marking an official end to the rally or if the market rallies tomorrow the red 5 will begin bouncing up from the green 10 MA line to begin another wave up in the market. 
In chart 3 of row 1 we have another make or break in that we will be retesting the black 200 ma  and the grey 150 ma lines tomorrow.
In chart 4 row 1 we have yet another make or break tomorrow in that we will also be retesting the lower brown line of the mother channel.
In row 2 chart 3 We see that this morning's open and today's close are a nice double pin set up starting.  In row 3 chart 2, the intraday chart, we see that they are setting up a nice 5/108 ema bounce set up.  In row 3 chart 3 we see that today's double pin bottoms are both down fairly deep into the buy area of the advance/decline chart, a big plus.

Tomorrow is Friday and over the summer the prevailing pattern has been for Fridays to be the slow float upward on low volume day, followed by a gap up at Monday's open.  This makes really convenient timing for the bulls and the bailout team. The problem is the bears know this also and they will be ready to short big at the first sign of weakness.  Three weeks of driving the market up means nothing without a successful retest of the breakout line.  Don't bet more than you can afford to lose either way on this one.


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