S & P 500 Analysis

S & P 500 (US Index) is in a secular bull trend from March 2009, which has more than doubled from lows of around approximately 700 odd levels to 1680 odd levels. The daily chart has held the intermediate trend line and has  bounced back from the lows perfectly.

Fig 1. S & P 500 Daily chart

The indices is on the verge of making a final top. Also near the 20 DMA which comes around 1646 (Fig. 2) break above can see a rally towards 1675 - 1680 odd levels. 

The gap up of (6/6/2013) which is 1622.56 and a low of 1625.27 (7/6/2013) also favoring the bulls unless it has been closed within few trading sessions to be void. 

As shown in the chart below the index has bounced perfectly from the lower channel of bolinger band which is aroun 1602 and the willams % R was also indicating oversold region in short term.

In case of a symmetrical triangle formation ?

Scenario 1 - move above 20 DMA 1646 - 1677 back towards 1620 then a upward break above 1655 odd levels can lead the indices final leg on upside towards 1692 - 1750 odd levels.

Scenario 2 - 1646 held and again a downward trend resumes. A warning sign can be seen below 1600 and 1580 odd levels. A confirmation of downtrend can be assumed below 1550 odd levels. The indices could confirm a medium term top with targets 1500 - 1480 - 1450 and 1400 and further much below. 

Fig 2. S & P 500 Daily chart

So next 3-6 of weeks can unfold the index direction with the formation of complete pattern. Fundamentally FOMC (Federal reserve) meet held on June 19th 2013 can be a trend changer is well. 

Here patience is the virtue of the game.

S & P 500 is one of the widely tracked and traded indices across the globe. Intermarket analysis is vital while trading even in domestic markets. The correlation exits between financial markets across the world in financially inter related economies. So global macros also needs to be considered. 

So trade objectively and wisely with the consideration of own risk and volatility. The strategy would be to wait patiently for the right opportunity to unfold to probable profitable trade setups.

Raju V Angadi

 Equity Research Analyst

 To know more about probable counts contact us back on rvangadi@googlemail.com 

Disclaimer: This is just an view based on the research of individual. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in stock markets.