The State of the Trend

By: George Krum | Mon, Jul 1, 2013
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Last week we identified the SPX 2007 high as the key level to keep an eye on, and as a litmus test of whether Bernanke's words are doing more harm than good.

SPX Chart

As soon as the SPX dropped below that level, the FED started backpedalling and dragging out FED heads to soothe the markets. Although a similar strategy can be successful for only so long, desperate times call for desperate measures.

From a cyclical point of view, there is a clear historical precedent for what may happen if the stampede for the exit gets out of control:

The mid-week rally fizzled within the May 3rd gap zone, better visible on an intraday SPY chart:

Moving back to the daily SPX, this creates very clear pivot levels for the days ahead: bullish above 1620, neutral between 1576 and 1620, and bearish below 1576.

 


 

George Krum

Author: George Krum

George Krum
www.citdates.blogspot.com

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

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

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OT Signals - a web app accessible from any browser, tablet or pc. It gives buy/sell/hold ratings for any instrument from around the world, and defines the trend and support/resistance levels.

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