lowtrade

[phrantic]

Low, I sure would appreciate any corrections or additions you could point out to my following analysis. I'm attempting to get a grasp of where the market is heading. This is a view of the overall market expressed via a 3-year weekly chart of the S&P using 25, 50, 200MA's. I expect to see a marked pullback for a number of reasons. As the chart stands currently, major long-term resistance resides at 1300 (horizontal green), major support ranging from 1060 (blue) to 1150 (green). Upper short-term resistance trendline (red) coincides with long-term resistance at 1300 (horizontal/green). Lower long-term trendline (red) offers additional support currently at 1105.
My chart-based belief is that the S&P will pull back to its most logical resistance point at 1060 (blue) which requires violating support at the cup and handle lip of 1225 (green). Note the progressively radical/deeper pullbacks beginning in August '09, then September '09, then October '09 (underlined in orange), then February 2010 (underlined in blue forming support at 1060), then the exaggerated pullback forming the cup & handle base producing a low at 1025. Also note the incredible instability forming the cup and handle base demonstrating indecisive market sentiment and emotion. The market has remained primarily overbought since August 2010 to present. Target for the cup & handle is 1395 which coincides with upper trendline resistance (green), and concurrently the lower trendline forming support in harmony with the 200MA. While I see the target of 1395 as a possibility, I would extend caution in this regard based on the overall personality of the chart as delineated above. Another factor lending credence to an impending correction is reflected in the consistently decreasing volume since the inception of the uptrend/bull market beginning March '09 (pink).
Since the low of July '09 to present the major indexes are established as follows: Dow up 21.51%; S&P up 26.10%; NAS up 31.2%. I am convinced the leading index always represents what is going on in the market, but because of the technologicals towing the NAZ by the nose, I chose to use the S&P as a smoothing instrument feeling it's a more accurate engulfing indicator. I would note that since the beginning uptrend in March of '09 the price has pretty much obeyed the 50MA and believe if that is violated it could prove useful as an early indicator of a possible market correction. I value your tech skills and would very much like your input. TIA