Sunday, October 14, 2012

$SPX update

I was wondering about market correction going on currently, if it is a correction in a bull trend or something serious to take note of. 

Since the June 1st week low of 1274, $SPX rallied ~ 200 pts and topped out in September. There have been 6 minor corrections of 40 - 50 pts along the way. I highlighted them on the graph. All of those corrections didn't exceed more than 40 - 50 pts and maintained consistency. How come there was so much accuracy? This correction is also worth ~ 50 pts so far.There is a difference between the current one and the past 5 corrections in this intermediate trend. None of them tagged the lower bollinger band, the price had a good relative strength (RSI). With these key points in mind, I can conclude that this correction will fall further albeit there may be a bounce into next week because the market is oversold. $COMPX is doing worse than $SPX, $DJI is in a better strength - this is also a sign of coming market weakness. 

Very short term - oversold, looking for bounce
Short term - bearish
Intermediate term - bullish
Long term - bullish by a long way

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