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Dec 11th, 2009: EOD Charts – The Bigger Picture

Posted by pugsma on December 11, 2009

After a week like this, where things seem to get more confusing by the day, it’s always best to step back and take a look at the larger picture.  I’ve been showing the narrow view, 5-min SP-500 chart all week with both a bearish (primary) and bullish (alternate) options.   Nothing has been resolved as of the close of the market today and both options are still valid, since the SP-500 close between the 1085 and 1113 rectangle pivots.

However, lets step back for a moment and take a look at the 15-min, 60-min, and Daily Charts.  We’ve been trading inside the rectange since Nov 16th or neary 1 month now.  Both the bulls and bears have had ample opportunity to break-out to either side.  The economic news has been much better than expected, with employment nearly break even for November, steady reduction in the initial unemployment claims, good trade decit data, better than expected retails sales and improving consumer sentiment.  Yet the markets have failed to make significant new highs.  But on the plus side, all the key supports like the 20-day and 50-day SMA have been steadily moving up and the SP-500 has stayed above them.  The 20-day is now at 1102 an the 50-day at 1083.  This sideways consolidation above these supports has set the stage for a potentially exposive rally into year’s end.

Structurally if you look at the Daily Chart, you can see that a finish for Wave [5] of P1 at or near 1150 makes good sense with respect to the key trendlines.  And on the 60-min chart you can see that if the wave 5 of [5] of P1 maximum plays out, the target is 1154.

On top of all this, the US Dollar has or will soon complete a 5 wave move up off it’s recent Dec 1st low (see UUP charts from earlier today).  If the US Dollor pulls back in a wave 2, then this should help to push commoditity and energy stocks higher in the coming weeks.  This will in turn help to push the SP-500 to fresh new highs.

So in summary, while the bearish option is still on the table.  The tide has turned to a bullish conclusion for Wave [5] of P1 reaching new highs in the 1130 to 1150 range (call in 1040 for an average).

5-min Chart:

15-min Chart:

60-min Chart:

Daily Chart:

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