The State of the Trend

By: George Krum | Sat, Jun 30, 2012
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Two weeks ago we identified the 1313 as an important SPX level above which bulls remain in control. That level was successfully tested three times this week and the SPX added another 50 points to the upside.

By doing this, the SPX also completed a rebound from the lower to the upper Hurst Channel:

Chart courtesy of OddsTrader.

The last leg of the rally helped propel the SPX just above the 38.2% Fibonacci resistance level at 1360:

Source: OT Fibonacci

It should come as no surprise that market internals have rebounded and have reached short-term overbought levels:

In summary, the SPX accomplished an impressive rebound this week and is currently bumping against solid Hurst Channel and traditional TA resistance levels. Market internals are overbought and the daily risk reward ratio has increased to more than 2:1 in bears' favor. This suggests that a new period of consolidation/retracement is likely upon us. A further breakout from current levels should stall at 1380, while a breakdown below 1360 will encounter support at 1340.



George Krum

Author: George Krum

George Krum

George Krum is the author of the "CIT Dates" blog, and the following apps available from iTunes:

OddsTrader - uses the power of Hurst Channels to produce price and time targets, and combines them with proper risk and position size management.

OT Trend - helps you quantify and forecast the seemingly random ebb and flow of stock, index or mutual fund movement.

OT Fibonacci - automates the process of applying Fibonacci numbers, ratios and time series to any security.

OT Seasonal - allows you to perform seasonal analysis on practically any security from around the world and to build long-term forecasts and models.

OT Pairs - is the first mobile app that gives users access to one of the most profitable and time tested hedge fund trading strategies.

OT Pivots - combines the power of Pivot lines with cycles and automatic signal generation.

Gann 9 - is the only financial app that allows users to effortlessly apply the legendary W.D. Gann's tools and methods for trading (including the Square of 9).

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Source: The Contrarian Take