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Amateur Investors Weekend Stock Market Analysis (7/17/10)

http://www.amateur-investor.net/Weekend_Market_Analysis_July_17_10.htm

The S&P 500 found support on July 1st near its 38.2% Retrace of 1009 (blue line) which was calculated from the March 2009 low of 667 to the April 2010 high of 1220. Meanwhile despite the impressive 9% bounce from the 1011 low in the S&P 500 over a 2 week period it's still exhibiting a potential Head and Shoulders Top pattern. If the 1009 level were to be taken out at some point in the future then that would eventually lead to a larger correction with the next area of longer term support either at the 50% Retrace of 944 (red line) or the 61.8% Retrace at 878 (brown line)



Meanwhile for this bearish pattern to be broken which is starting to evolve into a series of lower Highs (H) and lower Lows (L) the S&P 500 would have to rise back above the 1131 level in the weeks ahead.



Keep in mind for the longer term health of the market we don't want to see a repeat of the 2000 through 2002 time period in which the S&P 500 made a series of lower Highs (H) and lower Lows (L) after peaking in early 2000. The pattern was finally broken in early 2003 after the S&P 500 lost 50% of its value. Also notice from 2000 through 2002 there were some impressive sharp oversold rallies as well ranging from 10% to 24% even though the longer term trend continued downward.