Market Levels and Expectations

heading higherBy Andrew Nyquist
After the big up day yesterday, investor expectations have experienced a bit of whiplash; from the doldrums of last week to overnight dreams of a “santa” rally; yes, this isn’t an easy market to game.  Yet, however disfunctional it feels, the market (S&P 500) is operating within some technical constraints now: notably, the 50 day moving average and the 200 day moving average.

With yesterday’s move, the S&P 500 lifted above the 50 day moving average.  And today, the index has re-tested this level and held (so far), which is healthy.  A move below the 50 dma would be a warning, and a move below 1220 would sound the sirens.  On the flip side, the market has layered resistance between 1250 and 1260… the 200 day moving average and that damn 1257 number again!  Note also that due to a possible technical inverse head and shoulders formation, a sustained break of 1260 could ignite a bull stomp to 1350.  See annoted chart below.

Happy investing.

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Position in S&P 500 related index fund (SPY) at time of publication.

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.