I came across the following article, and it has such a  different way of looking at the market that I just had to post it. After you read the article…maybe the recent Shrek box-office disappointment is the first stage…you’ll understand after you read it.  Enjoy.

Cory Mitchell, CMT

What Can Movies Tell You About the Stock Market?
March 15, 2010

By Editorial Staff

The following article is adapted from a special report on “Popular Culture and the Stock Market” published by Robert Prechter, founder and CEO of the technical analysis and research firm Elliott Wave International. Although originally published in 1985, “Popular Culture and the Stock Market” is so timeless and relevant that USA Today covered its insights in a recent Nov. 2009 article. For the rest of this revealing 50-page report, download it for free here.

This year’s Academy Awards gave us movies about war (The Hurt Locker), football (The Blind Side), country music (Crazy Heart) and going native (Avatar), but nowhere did we see a horror movie nominated. In fact, it looks like Sweeney Todd, The Demon Barber of Fleet Street was the most recent to be nominated in 2008, for art direction (which it won), costume design and best actor, although the last one to win major awards for Best Picture, Director, Actor and Actress was The Silence of the Lambs in 1991.

Whether horror films win Academy Awards or not, they tell an interesting story about mass psychology. Research here at Elliott Wave International shows that horror films proliferate during bear markets, whereas upbeat, sweet-natured Disney movies show up during bull markets. Since the Dow has been in a bear-market rally for a year, now is not the time for horror films to dominate the movie theaters. But their time will come again.

In the meantime, to catch up on why all kinds of pop culture — including fashion, art, movies and music — can help to explain the markets, take a few minutes to read a piece calledPopular Culture and the Stock Market, which Bob Prechter wrote in 1985. Here’s an excerpt about horror movies as a sample.

* * * * *

From Popular Culture and the Stock Market by Bob Prechter

While musicals, adventures, and comedies weave into the pattern, one particularly clear example of correlation with the stock market is provided by horror movies. Horror movies descended upon the American scene in 1930-1933, the years the Dow Jones Industrials collapsed. Five classic horror films were all produced in less than three short years. Frankenstein and Dracula premiered in 1931, in the middle of the great bear market. Dr. Jekyll and Mr. Hyde played in 1932, the bear market bottom year and the only year that a horror film actor was ever granted an Oscar. The Mummy and King Kong hit the screen in 1933, on the double bottom. These are the classic horror films of all time, along with the new breed in the 1970s, and they all sold big. The message appeared to be that people had an inhuman, horrible side to them. Just to prove the vision correct, Hitler was placed in power in 1933 (an expression of the darkest public mood in decades) and fulfilled it. For thirteen years, lasting only slightly past the stock market bottom of 1942, films continued to feature Frankenstein monsters, vampires, werewolves and undead mummies. Ironically, Hollywood tried to introduce a new monster in 1935 during a bull market, but Werewolf of London was a flop. When film makers tried again in 1941, in the depths of a bear market, The Wolf Man was a smash hit.

Shortly after the bull market in stocks resumed in 1942, films abandoned dark, foreboding horror in the most sure-fire way: by laughing at it. When Abbott and Costello met Frankenstein, horror had no power. That decade treated moviegoers to patriotic war films and love themes. The 1950s gave us sci-fi adventures in a celebration of man’s abilities; all the while, the bull market in stocks raged on. The early 1960s introduced exciting James Bond adventures and happy musicals. The milder horror styles of the bull market years and the limited extent of their popularity stand in stark contrast to those of the bear market years.

Then a change hit. Just about the time the stock market was peaking, film makers became introspective, doubting and cynical. How far the change in cinematic mood had carried didn’t become fully clear until 1969-1970, when Night of the Living Dead and The Texas Chainsaw Massacre debuted. Just look at the chart of the Dow [not shown], and you’ll see the crash in mood that inspired those movies. The trend was set for the 1970s, as slice-and-dice horror hit the screen. There also appeared a rash of re-makes of the old Dracula and Frankenstein stories, but as a dominant theme, Frankenstein couldn’t cut it; we weren’t afraid of him any more.

Hollywood had to horrify us to satisfy us, and it did. The bloody slasher-on-the-loose movies were shocking versions of the ’30s’ monster shows, while the equally gory zombie films had a modern twist. In the 1930s, Dracula was a fitting allegory for the perceived fear of the day, that the aristocrat was sucking the blood of the common people. In the 1970s, horror was perpetrated by a group eating people alive, not an individual monster. An army of dead-but-moving flesh-eating zombies devouring every living person in sight was a fitting allegory for the new horror of the day, voracious government and the welfare state, and the pressures that most people felt as a result. The nature of late ’70s’ warfare ultimately reflected the mass-devouring visions, with the destruction of internal populations in Cambodia and China.

Learn what’s really behind trends in the stock market, music, fashion, movies and more… Read Robert Prechter’s Full 50-page Report, “Popular Culture and the Stock Market,” FREE

Markets around the world in all different asset classes fell through the floor today. On the weekend I posted that key support had broken in the US equities markets and that moves up to resistance were selling opportunities.  That is still the case.  The market did pull back on Tuesday almost exactly to 1104, which was a potential turning point.  The market rejected that level on Wednesday and it is highly unlikely we will see that level again for some time.

Today’s sell off took the S&P 500 to just above the next support level (see the weekend chart) which is at 1061.  Support beyond this is at 1052, 1045 and 1030.  Movement below one of these support levels indicates that overtime the level below it is also likely to be tested.

The chart has been attached again.  A few of the trendlines have been removed up near the top to clear it up a bit, but everything else has remained as it was on the weekend (on the weekend I used an hourly chart though, this is now a daily).  The descending blue fan lines were very accurate on the mid-week retracements, and may continue to be a good indication of where pullback are likely to stall.

S&P 500, Daily Chart

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Cory Mitchell, CMT

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The stock market was pushed lower Friday once again, finishing on it’s lows for the day, week and last 2 & 1/2 months.  We will look at the S&P and and what can be expected going into next week, Feb 1-5.

As we entered the new year the stock market was taken higher on a whimper of an effort.  It drifted higher, but seemed weak intra-day.  Key support was at 1086.  With that now broken and the market closing at 1073 the target for this downward break is 1052-1050.  This also correlates with horizontal support which comes in at 1053 and extends down to 1046.

In order to provide any optimism for a renewed push higher this market will need to get above 1104.  Until that occurs movements up to resistance are selling opportunities.  Prior to that, minor resistance is at 1078, 1084, 1090.  Above 1090 there is a resistance range which extends up to the 1104 level, but keep an eye on 1096 and 1100 which are recent intra-day highs.

Volatility has increased dramatically and therefore there are potentially many important levels which can be used for intra-day and swing trading.  The S&P chart below is somewhat cluttered looking, but can provide guidance on short-term momentum.  The sell off has been swift and resulted in downward trend that is nearly vertical on the hourly chart.   Corrections higher will occur; the Blue Fan extending out of the descending price action gives indication of where corrections are likely to pause.

Intra-day swings have been large and very “trendy” meaning there is often two strong moves, sometimes 3, in a day which can provide short-term trades with excellent opportunities.  Using a simple intra-day trend line has been extremely effective in indicating which side of the market to be on as these intra-day trends occur and reverse.

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Have a great weekend,

Cory Mitchell, CMT

S&P Hourly

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Tough week for the equities markets with the S&P 500 index losing about 4%.  Between Wednesday and Thursday we had an interesting dynamic play out which tied in with the break below 1130 – which I mentioned last week needed to be watched because a break below that would target 1110.  The market surpassed the target with a weekly range twice that of the average week.

Wednesday we saw the 1130 area tested, but it recovered and finished up near 1138.  Thursday the market started to fall.  And then took out the lows of Wednesday.  The penetration of that low was our warning signal.  Why?  This is what I call a truncated price swing….it may sound fangled, but really it is reversal on any time frame where we have a price confirmation that the current trend is in jeopardy or has been broken.   When we view a chart (15 min, hourly etc) of the market so far this year we see prices making higher (or similar) highs, and not penetrating significant support on the downside – the main support being 1130.  So when the market rallies and can not get to a former high, we have our first indication something is wrong.  When a key “low” is taken out, our trend has changed. It was the first time a former significant high was not matched and a significant low was taken out.

The definition of an uptrend, simply put is “higher highs, higher lows”.  When these criteria are no longer there or the criteria reverse, the trend is jeopardized.  In this case the sell-off was swift and hard.  It came on increasing volume and sold right into the close on Friday, none of which are good signs for bulls.

Starting around January 11 we start see to volatility increase and then sky rocket on Wednesday-Friday this week.  A volatility increase is often associated with moves to the downside.  Downside corrections since the 11th were matched with aggressive buying creating an 18 point range in the S&P, but this week the former high was not reached, significant support was taken out and volatility and volume increased…. a perfect short-term storm set-up.

Going into next week the 1084 will need to hold (if you want this market to stay up).  If it does not it indicates another wave of selling with targets of the downside of 1072, 1068, 1061, 1053 and 1046. A key swing low is beyond this with a support area of 1034-1030.

On the upside resistance comes in at 1105, 1110 and 1114-1116, 1020 and 1123.  Movement above 1123 indicates movement up into 1126-1128.  Breakouts will often move back to test the breakout point (but not all the time!), which in this case is 1130.  This is still a key level even though the level was broken.  A rally through that level in the future indicates the possibility of a further rally.  Failure to reach 1130 or the market being rejected (lower) at that level indicates selling once again and likely retest of lows set on Friday.

For a fundamental outlook at some of the world economies you can read Friday’s post…The Next Asian (And US?) Crisis?

There are some key lessons in this analysis which I hope you find helpful in your trading and investing.  If you want to further your knowledge and to create an edge in your trading you can get:

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

S&P 500 - Hourly

It was not a pretty day for the longs in the markets today.  Equities fell off aggressively as the day drew to a close.  The bulls did pour in after the morning selling off, taking the S&P back to test the days high, but the buying was short lived as bulls were swarmed.  The major US indexes finished down more than 2%.  Asia had already seen selling in their sessions with differing Asian/Pacific indexes down between -0.65% and -2.56%.

The following is an article by Colin Twiggs which looks at the current Asian market situation.  Keep in mind that with markets so interlinked today, the potential fallout in one country affects multiple markets around the globe.

The Next Asian Crisis

By Colin Twiggs
January 22, 2010 9:30 p.m. ET (1:30 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use-Incrediblecharts.com.

China: Red Star About To Implode? (Tradable via FXI <—–Instant Analysis)

China’s reaction to the global financial crisis was to stimulate domestic demand in an attempt to make up for the sharp contraction in export orders, primarily from the US. The strategy was twofold: a $586 billion stimulus plan and to stimulate private demand by quantitative easing. At a staggering 20 percent of GDP, the stimulus plan boasts a massive infrasture spending program including construction of new railways, environmental protection and investment in new technology. Aggressive quantative easing aimed to boost private borrowing by lowering finance costs and easing credit standards.

The resurgence, with GDP growth reaching 10.7 percent in the fourth quarter (WSJ) appears to vindicate the strategy, but the true cost of the plan lies ahead. Bank loans grew by $1.4 trillion in 2009, or 29 percent percent of GDP. That is madness — and likely to cause a massive speculative bubble in real estate, the stock market, and to some extent commodities. Inflation is also starting to bite, with the consumer price index up by 1.9 percent in the last month.

A sharp cut-back in bank lending, however, will cause a contraction in private demand, sending the manufacturing industry back to where they started — with a large hole in their order books. Welcome to the real world.

Japan: How To Turn A Financial Crisis Into A Total Disaster (Tradable via EWJ <—–Instant Analysis)

Japan is a lot farther down the track than China. In an attempt to avoid the collapse of its banking system after the implosion of an enormous real estate and stock market bubble in the early 1990s, Japan embarked on a similar strategy to the one now pursued by China. Massive infrastructure spending and aggressive quantative easing, with the BOJ maintaining interest rates near zero for most of the last two decades failed to restore the economy to its former growth path. The new government now finds itself painted into a corner, inheriting massive public debt as a result of the failed stimulus program. The IMF expects Japan’s gross public debt to reach 218pc of gross domestic product (GDP) this year, 227pc next year, and 246pc by 2014 (Daily Telegraph). With savings rates falling, further stimulus spending is no longer an option and the pigeons of the 1990s will finally come home to roost. Except they now closer resemble pterodactyls.

USA: The Dow Retreats

The Dow retreated by more than 5 percent after the voters of Massachusetts sent a clear message to the White House: either p… or get off the pot. The cosy relationship between Washington and Wall Street is coming to an end as elected leaders scramble to preserve their seats. Expect more legislation to curb the excesses of Wall Street, restricting remuneration and imposing taxes or levies to recover some of the cost of the financial collapse. Treasury has to raise taxes in order to restrict public debt growth and the obvious target is Wall Street.

Financial stocks are worst affected by the retreat, but sectors such as Energy and Materials also display a sharp fall — indicating that a contraction of financial stocks is likely to impact on the broader economy.

Avoiding Japan II

The voter backlash is likely to restrict the Fed’s ability to pursue further quantitative easing. Re-election of Ben Bernanke as Fed Chairman is going to be a close-fought affair with even Democrat senators, like Barbara Boxer of California, whose seat is under threat, calling for a new candidate who represents “a clean break from the failed policies of the past”. Also, expect increased reluctance from Congress to fund further deficits by increasing public debt — curtailing government spending and increasing pressure to raise taxes.

…………………………….

Hope you found that interesting and insightful.  Tomorrow I will post the technical outlook for the US markets and what we can expect going into next week.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

The year started out strong for US stocks, breaking out above the range that had pervaded much of the last two months of the 2009.  The S&P also finished at a recent high, closing out strongly on Friday.  Volume was not great and throughout the week there were numerous examples of times when the market barely seemed to be open – the futures and many stocks stuck in small ranges with no activity whatsoever.  None the less, the bull rally has continued.

Thanks to Friday’s quiet afternoon and aggressive close, initial support for this market comes in just above this range at 1141.60 which is also Thursday’s close.   Further support for the week comes in at 1139, 1136 and 1131-1129.50.  A series of lows is collected in this final area.  Due to last Monday’s aggressive buying off the open, there is little support below this area for some distance, although some support may come in just below 1128.  Further support comes in at 1123.50 and 1116-1114.50.

The weekly average (14)  range for the S&P is 31.8 points. Volatility has been dropping off significantly and pretty steadily since early Nov (and over the longer term as well).  With volume lower, volatility down and much of the gains over the last 5 months coming from gap opens instead of intraday movement, the market seems rather complacent.  So far, in the first week of the year, the market tended to open low but then rally into the close for a positive gain.  Whether this dynamic continues into this week is yet to be seen.

Resistance has clearly been broken on the upside, and very little stands in the way of further moves higher.   The target for the range breakout was 1146 and 1149.  The S&P closed at just about 1145.  Profit targets are not reversal points, the market could easily keep going, none the less these points can be significant and we are very close to them.  With “nothing but air” on the upside, resistance beyond comes in just below 1154, followed by 1160 and 1168.  After this little resistance remains until 1180.  Intraday action throughout the week will provide additional resistance and profit target levels.   Once again keep in mind the average weekly range  for this market currently is 31.8 points (both up and down) so a move to these extreme levels is not highly probable with volatility dropping.

The chart near the bottom of the post shows current trendlines and some major levels worth noting.

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Cory Mitchell, CMT
-Know your risks when trading. Please read the Legal Disclaimer page.

Wow, the year has come and gone, and what a year it has been.  Many day traders I know, including myself, took some time to adapt to the diversity the markets gave us this year, but ultimately if the trader managed to adapt it was a fantastic year indeed.  Opportunities abounded, and heading forward I truly believe we live in a time where phenomenal short-term trading gains are all around us.

In the final week of the year we saw the market continue to break to new (recent) highs above the former range highs, but volume was very light.  Thursday, the final trading day of 2009 for stocks, saw aggressive selling into the close with the S&P falling falling 7 points in the final 25 minutes of trading after another very sedate afternoon.  The S&P closed back within the old range.

On the hourly charts we see something interesting.  Despite finishing within the old range which has been with us since mid November, we do see a possible uptrend emerging; we failed to reach the range lows but made higher highs.    Short-term trend line support comes in at 1104.  Respect, and a bounce off that level and a move back towards the recent highs indicates this market is likely to experience a legitimate upside breakout and the reemergence of a bull rally in early 2010.

On the other hand, a move below 1104 and then 1094 indicates a retest of the range lows between 1086-1084.  Penetration of that level indicates the breakout higher was false and that this market is highly likely to head lower in early 2010.

S&P Hourly Through End of 2009

Fundamentally, as I have said so often before, the economy’s problems have been “solved” by making the problem bigger.  I see this coming back to bite us in the ass…exponentially!  Yet, anyone who really understands economics knows that most of the economic cycle is based on psychology (I can explain this in another post if there is interest), thus if the people buy into the idea that we are all good, then of course the market will go higher…. hence why I am a short term trader – these things all unfold one day at time.  That is how I will trade it – one day at a time based on the prevailing sentiment of the near term.

Starting in 2010 I expect volume to increase.  If this market is to move into a renewed bull rally, volume will need to increase.  If volume stays light or even decreases (!?) this market will stay range bound and decreasing volume is likely to sink it towards the range lows mentioned above.

It has been a strange year; many trading theories fell apart, correlations developed which are not commonly seen, and other correlations that are often seen failed to materialize.  Understanding the market with simple tactics and managing trading capital prudently is paramount to succeed in the new year.   To help yourself, make several trading goals for this year.  Take each goal and break it down to it’s smallest component so a method for attaining that goal  can be implemented methodically and rigorously.  By this I mean, what stocks will you focus on, time frame, volume, stop loss, profit targets, trailing stops, entry method, execution type, etc?  Take everything into account and work out exactly how you can get to your goals in a step by step fashion.

Best wishes in the new year, may this be your (and our’s) best year yet.

My friends over at INO are currently offering 4 free online video seminars from master traders via the link below.  After that you can decide if you wanna see more… INO TV is the only place where members have access to over 150 experts and 500 hours of seminars, for one price. INO TV gives its 30,000 members access to massive amounts of educational material that has been handpicked to provide you with the most for the least.

Find out what makes INO TV the right place for you.

Cory Mitchell, CMT
-Know your risks when trading. Please read the Legal Disclaimer page.

Overall, it was a fairly uneventful  week in terms of price action in the stock markets.  We had a lot of nice tradable moves during the week, but ultimately the market did not move into or out of any technical significant areas.  Volume was light, except for Friday which was due to index rebalancing and contract expirations.  In terms of the overall movement throughout the week, the S&P traded in a smaller range than average, only moving about 21 points all week; the weekly (14) average is just under 36 points and heading into this week was slightly higher.

Technically, the stock market (S&P and Dow Jones) are still range bound and that range is very much intact.  The S&P closed on Friday right around 1102.

Near term support is at 1094-1093 but movement below this level does indicate a high probability of retesting range lows.  Support near the lower range is 1086 and 1084.  A drop below 1080 (using a buffer below the lows) would punch us out of the range we were in.  The target for that breakout is 1055 which is just below a hourly trending support line (going back to Sept).  There is important interim support which will provide us with other signals if the breakout downward does occur.  There is little support, in the event of a break downwards, until 1072.  This is the top from a gap that occurred back in early November.  The low of the gap is 1070.  If that gap is closed by new price movement it is a bearish sign and prices are expected to continue to chart lower into the 1068-1064 area.  Support also comes in at 1060, therefore it will take fierce action, given our average weekly range,  to reach 1055 if in fact this market does break lower.

If we look at a daily chart, we see that the level we are at right now is right on a downward sloping trendline extending back from late 2007.  Really, the current range gives us our trading signals, as a breakout of the current range will also cause a break of the old trendline, a break lower out of the range will show that trendline has held.  But no matter which way the market breaks, old trendlines often have an impact on future price movements (see my article in the December issue of Stock & Commodities magazine), so it is worthwhile keeping on the charts.

On the upside we have resistance at 1104 which was respected during the afternoon sessions of Thursday and Friday.  Beyond this we have the Thursday open near 1106 followed by 1108 which will also act are resistance.  Beyond this is no significant resistance until 1116, although there is some minor levels at 1113-1114.  The resistance area near the highs is 1116-1120.  Moves have been fast and sharp up in this area, and it deserves respect.   If this range is broken out of, targets are 1123, 1128 and 1131.

The Dow Jones Industrials is another index can be looked at.  That market has been analyzed by my friend Adam Hewison.  He uses a few different tools to gauge this market, and also gives a slightly longer term view for those that are interested in looking beyond the next several sessions and are concerned about what may happen in the New Year.  So in that light, you can view the Dow Analysis video here: As the Dow Goes, So Goes the Country

With the holiday season I may not have an analysis posted next weekend.  So please pay attention to the range on the chart.  Have a wonderful and safe holiday season, and profitable trading in the meantime.  For those of you who view my EUR/USD analysis each night, well, I will see you soon, since we still got several sessions before Christmas.

Cheers and Happy Trading,

Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read the Legal Disclaimer page.

The S&P 500 which is a good representation of the overall stock market is still very much range bound, and is likely to remain so until the new year.  A very quiet Friday with little volume did little to inspire confidence to the contrary.

1100 is the nearest main support level for the upcoming week, with a move below it indicating a test of 1098-1097 with the lower portion of the gap created Friday.  Support beyond is 1095-1094 but movement to this level does indicate a high probability of retesting range lows.  Support near the lower range is 1086 and 1084.  A drop below 1080 (using a buffer below the lows) would punch us out of the range we were in.  The target for that breakout is 1055 which is just above a hourly trending support line (going back to Sept).  There is important interim support which will provide us with other signals during the week.  There is little support, in the event of a break downwards, until 1072.  This is the top from a gap that occurred back in early November.  The low of the gap is 1070.  If that gap is closed by new price movement it is a bearish sign and prices are expected to continue to chart lower into the 1068-1064 area.  Support also comes in at 1060, therefore it will take fierce action to reach 1055 if in fact this market does break lower.  This is because the average weekly range for the S&P is just over 37 points, and the market closed on Friday right around 1106.

On the upside resistance is at 1109-1111.  A move above this area represents the likely scenario that range highs will be tested.  The resistance area near the highs is 1116-1120.  If this range is broken out of, targets are 1123, 1128 and 1131.

My friends over at INO are currently offering 4 free online video seminars from master traders via the link below.  After that you can decide if you wanna see more… INO TV is the only place where members have access to over 150 experts and 500 hours of seminars, for one price. INO TV gives its 30,000 members access to massive amounts of educational material that has been handpicked to provide you with the most for the least.

Find out what makes INO TV the right place for you.

Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read the Legal Disclaimer page.

The following is a predominantly technical analysis view of what to expect to in the stock market in the upcoming wee (Dec 7-11).  We will use the S&P 500 as our reflection of the market.  This can be used by day traders, swing traders or investor to gain insight into what is unfolding, what to expect and what to look for.

Intra-day traders saw large and swift moves occur this week.  If an hourly chart of the S&P 500 is pulled up for Nov 10- Dec 4, we see a range which is peppered with aggressive buying and selling into the extremes and then pulling back off the levels and heading to the other side.

Something very interesting to note is that on 3 consecutive days (Dec 2, 3, 4, always early in the day) the market went above the previous swing high, triggering stops and buy orders, and then pulled back into the range.  The lack of conviction above 1115 indicates this market is not likely to move aggressively higher…and if and when it does it will be in the new year.

This does not mean we won’t see tradable moves above 1115, but with circumstances right now -  volume light, global risks, disconnects between intermarket relationships- this area is a danger zone until volume picks up and we successfully break above this area, move higher and then on a pullback successfully hold that level.  In other words, patience will be required.

Massive moves are expected in all the following major markets: currencies, commodities and the stock market (bonds too, but I don’t focus on them too much).  We may have started to see this on Friday.  How easily we jump from bubble to bubble.  What catalyst sets off the fireworks is yet to be determined.

But lets’ move to focusing on the actual technical levels of importance:

In the upside, 1115-1120 is a resistance area determined my multiple false breakouts.  I would use at least a two point buffer above this level.  As mentioned above, with light volume I much prefer not to trade the breakout but wait for the breakout to falter and then short the market as it falls back through the resistance area (that is not advice…that is simply what I am watching for).  If a legitimate breakout does occur, even on light volume it can scamper quite a ways.  Targets are 1123, 1128 and 1131.

On the downside 1096 is important.  A move through there takes out the Friday low and would successfully close the window (gap) opened on Dec 1.    Such a move indicates a movement to test to lows of the range.  1087 is the most likely target followed by 1085.

A drop below 1080 (using a buffer below the lows) would punch us out of the range we were in.  The target for that breakout is 1055 which is just above a hourly trending support line (going back to Sept).  There is important interim support which will provide us with other signals during the week.  There is little support, in the event of a break downwards, until 1072.  This is the top from a gap that occurred back in early November.  The low of the gap is 1070.  If that gap is closed by new price movement it is a bearish sign and prices are expected to continue to chart lower into the 1068-1064 area.  Support also comes in at 1060, therefore it will take fierce action to reach 1055 if in fact this market does break lower.  This is because the average weekly range for the S&P is just over 37 points, and the market closed on Friday right around 1106.

Trade with the trend, but don’t become attached to it.

My friends over at INO are currently offering 4 free online video seminars from master traders via the link below.  After that you can decide if you wanna see more… INO TV is the only place where members have access to over 150 experts and 500 hours of seminars, for one price. INO TV gives its 30,000 members access to massive amounts of educational material that has been handpicked to provide you with the most for the least.

Find out what makes INO TV the right place for you.

Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read the Legal Disclaimer page.