SPX – Deep Dive – Bullish Outlook

June 14th, 2009 10:37 am mylifemytrade Leave a comment Go to comments

Flashback: Nov 2008 – Feb 2009: From Nov 10, 2008, SPX formed a technical pattern, what is known as Penant OR the Symmetric Triangle. This technical pattern is a CONTINUATION pattern. It resolves in the direction in which the penant was enetered.

2009-06-14-spx-penant-downside

In Nov 2008, the penant was entered going down. As a result the expected outcome was that the penant will resolve to the downside – which is exactly what happened on Feb 16, 2009 (in hindsight, the fate was sealed on Feb 10th, even before our much adored Timmy (Geithner) opened his mouth to speak about the “Bank Plan”. I still remember “tape gazing” that morning and watched the indices plummed 2 to 3% as the CNBC anchors laid out of the summary of the plan. Those were the day – right :-)

Fast Forward to May 29, 2009: What was bestowed upon was YAP (Yet Another Penant). The difference being that the penant was entered going up. So, the expected resolution was to the upside.

2009-06-14-spx-penant-upside

Which is exactly what happened in the last few minutes of May 29, 2009 – S&P futures ripped through the upside of the penant, spiking more than 20 handles in matter of minutes. The markets gapped open big time on Monday June 1, 2009 and left a gaping wide gap that is yet to be filled.

Fast Forward to June 14, 2009: What has happened since the penant resolution is quite bullish IMO.

2009-06-14-spx-rising-channel

SPX has consolidated nicely in a more or less sideways fashion putting in higher lows and higher highs. In fact the leading index for this rally, QQQQs have also put in higher lows and higher highs.

2009-06-14-qqqq-rising-channel

Coming Attractions: More upside! SPX should test 975-980 this coming week. What is an even exciting prospect is that if 1000 level on SPX is taken out, then there is a region of 100 points to the upside where there is virtually no resistance and whenever we get there “WE WILL RIP THROUGH THAT 100 POINT REGION IN LESS THAN A WEEK”. I am not suggesting that we will get there because it is some ways out in the future and it will be arrogant of me to even try and think that I can predict that. However, what I feel comfortable predicting and putting my money on is that we have more upside in this coming week – we will, in all probability see new highs for this rally on SPX. As always, if you got something out of what you read, please do share some love. Also, I have enabled DISQUS here – so additionally feel free to leave any thoughts/comments/criticism (always welcome)/suggestions/contrary ideas – whatever – everything welcome :-)

2009-06-14-spx-very-bullish-setup

Categories: Market Forecast Tags: ,


  • Man that is GREAT analysis. Nice site as well.
  • Goldie
    Nice Post. One thing though. QQQQ has put in a lower low, which is worth watching. If the QQQQ put in a lower high, I will get short..
  • Thank you :-)

    You are right - I did not notice that QQQQs in fact put in a lower low.. where as SPX had put in a significantly higher low. Major divergence between the two indices here. I agree that it would be time to go short if QQQQs put in a lower high here.

    A lot of the tech momentum favorites - AAPL, GOOG, BIDU etc are a good 7 to 8% off their highs. RIMM is also few bucks off of the recent highs. Either this is the tell of what is to come.. OR is a fantastic fuel for the dip buyers to jump in on... Not making any big bets ... Looking to play largely with futures for now. Holding anything overnight is fraught with huge risks. I am inclined to go with the bulls for now.
  • IHMO the market leaders don't agree with your view about the rising channel on the Qs http://thetickerstreet.blogspot.com/2009/06/aap...
  • Thanks. I appreciate the contrarian point of view. One of the things that is being achieved by writing this blog is indeed to get what the people on the other side of my trade think. This is what makes the market - we need people on both the sides of the trade. Otherwise, there would be no market. Thanks for all your charts.
  • chum
    Hey MLMT,
    Just happened to be reading some of moo's older posts and saw your recent comment. Your new format looks great. Thanks for sharing your thoughts.
    In regards to "sharing the love" do I get tagged in some way if I do that? I don't want to open myself up to spam if I can avoid it.
  • Thanks for your kind words.

    Regarding "sharing the love" - No, you won't get opened to spam in ANY way... Trust me on this one. You can ask this same question around..

    With regards to tagging - Yes, a cookie does get stored on your computer. But such a cookie gets stored for pretty much every website that you visit. But that does not open you up to any kind of spam or any other kind of security threat.

    I can talk about this matter in only a limited scope here. I can write an email to you (fortunately or unfortunately, being an owner of this blog, I am able to see the emails of those who post here)... But I will write you an email only if you permit me to do so.. Otherwise it is me spamming you.
  • chum
    I'll take your word about the not getting spammed. You're certainly welcome to send me an email but if you are going to give me a technical explanation of how the cookies and/or being picked up by spammers works it will probably be over my head. I can do have a basic level of knowledge, enough to accomplish what I want to do, and am very aware that many issues can be avoided by being selective about where I go and what info I provide.
  • PussyGalore
    When even the Bears have buckled up in their seats on Bull Market Airlines, remember to notice where the exits are....
  • After bull buses and bull trains looks like now we are onto Bull Airlines... Point taken... When the retracement starts, the first 5% or so will happen in blink of an eye...

    Btw, I read your other posts on disqus - very intriguing and interesting style of writing you got there - you would make a very good and captivating blog writer.
  • nnecker
    I agree with you,however to do this wont you have to peg the macd and stochastics?
  • Point well taken. What I talk about above is mainly the outlook. Entries and exists will be determined using oscillators.

    I do use stochastics... But MACD, mainly for confirmation. With stochastics the problem that I keep running into is that the daily ones have been overbought for quite sometime... whereas the weekly ones were showing bullishness for quite some time.. So, picking a time frame that works well with stochastics is still work-in-progress for me.
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