Replies to post #2052 on Stock Incubator

[dalcindo]

Re: $SPX - On the brink of support violation ...

As we are opening a new trading week, the following WEEKLY S&P500 chart is suggesting a very decisive trading session.

As of this writing (0210am on Monday 23 AUG 2010), this benchmark is sitting right at the lower border of its bullish channel.

Two weeks ago, we pointed out a BEARISH RSI per 14-RSI's failure to rally above its 45-EMA.

The next technical litmus test rests upon this critical step - whether SPX will break through its support and continue its tethered course within the BEARISH channel, or contradict its recent bearish course and remain within the confines of its bullish channel.

As always, time will tell.

- Dalcindo

$SPX - 3-Yr., WEEKLY Chart:

[dalcindo]

Re: $SPX - A Case For Waning Demand

There are several indications that the $SPX is undergoing serious selling pressures, and that the recent heights may - just may - represent the first lower high of a predominant bearish series.

The WEEKLY chart below (See: Chart #1 below) just recently validated (last week, actually) a predominantly bearish channel. Now, this occurred in the perfect technical scenario, where the prior high had reached the all-to-significant 61.8% Fib level. If this bearish scenario holds, then the recent high would constitute a second high, albeit it lower high, of this presumed bearish series. In fact, the resistance line for now remains the Fib-related 133-EMA line, which $SPX has consistently failed to violate.

Now, comes the supply/demand picture.

The bullish percentage charts ($BPxxx), originally designed for the $NYA, offers some added transparency. At least, in my eyes, the interpretation makes things a bit cleared. By definition, the bullish percentage allows indices, (or any group of stocks for that matter) to be gauged based on the underlying supply or demand for the individual securities it represents.

Taking a look at the $SPX chart (See: Chart #2 below; I also incorporated $COMPQ and $INDU below the same chart), one may use this analytical tool to gauge the trend, reversal, and strength of the aggregate demand (i.e.: BID, or buying pressure) or supply (i.e.: ASK, or selling pressure) that actually move the index in question.

In general rule (See: Stockchart.com's ChartSchool section on this tool here: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:bullish_percent_inde ), on may simply use the overbought and oversold signals at hand. But, trendlines will do for me, especially as they tend to define a support or resistance.

To avoid too long a message here, let me just say that the current development continues to favor a BEARISH scenario, one which may continue, unless the index proves to gain enough velocity to escape the current selling pressures and break free of the overhead bearish channel defined in Chart #3.

I will shortly add this chart on my public list here for End-Of-Day (EOD) analyses, which is when these $BP are updated: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281 .

- Dalcindo



Chart #1 - $SPX - 10-Yr., WEEKLY Chart:




Chart #2 - Bullish Percent - The Supply & Demand Underneath the Indices:



Chart #3 - $SPX - 3-Yr., WEEKLY Chart:



- Dalcindo