S&P 500 (ESu0) and other indices
Most world markets responded strongly from the March 2009 lows and the rally went on much longer than anticipated and killed many a bears. But with fundamentals disappointing for such strong expected recovery and crisis after crisis unfolding it does appear that the rally has run out its time. In the attached weekly chart of S&P500 index, it appears that:
- Top of the rally as 1219 was a key Fib reversal point for the down move from 1576-666. This indicate start of another big move down. It is quite likely to see lows below 666 but worth assessing that scenario after nearest support point is reached.
- Medium term top has been formed by Head and Shoulder pattern which has been completed. The projection from current H&S pattern down are looking like 950 – 850 region which is also a point where bulls can regroup and attempt to take the markets higher.
- The index is below 200d and 50d MA and 50d MA is about to cross 200d MA which is usually a strong bearish signal.
It would seem appropriate to keep selling the rallies until the pips squeak.