Technically Speaking: In the Heat of Battle
July 13, 2011 | 10:30pm ET
In the Heat of Battle
After nearly tagging the upper end of its multi-month trading range seven sessions ago, the S&P has settled the week back down near the middle of its range. Friday closed the week with an inside compression bar, which could set the stage for some fireworks early next week.
The S&P has given back 50% of the rather impressive advance from its mid-June 1258 low. It is now critical that S&P bulls muscle the index back up above the 1356 level. Failure to do so in the next ten sessions or so, will place the index at risk of retesting and possibly breaching the lower end of its range.
Though our proprietary trend signal bias is still bullish, the market remains range bound between 1249 and 1370 over the near to medium term. Victors of this multi-month sideways battle will celebrate upon a 120-point expansion or a 120-point contraction of the current range.
Longer-term, bulls will celebrate the spoils of this skirmish round about the 1490 handle, or about 13% north of current levels. Their bearish opponents will collect their bounty down around the 1130 level, which equates to a 14% decline from this weeks close.
So long as both contingents are generally successful at defending their respective range boundaries, the battle will continue. Right now, this particular battle is dead even.
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I trust and hope that you have extracted something of actionable value from this edition of Technically Speaking.
Until next time,
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Author: Joseph Russo
Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology
Joseph Russo, presently the chief editor and analyst for Elliott Wave Technology, has been studying Elliott Wave Theory, and the Technical Analysis of Financial Markets since 1991 and currently maintains active member status in the "Market Technicians Association." Joe continues to expand his body of knowledge through the MTA's accredited CMT program. Having passed the Level I examination in November of 2004, Joe is now preparing to begin study for his Level II exams. Upon successful completion of an exhaustive level III examination he will have earned the industries highly regarded designation of Chartered Market Technician.
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