SPX made an important close above the August 28 low of 1432 and its 5 DMA, with a full body and no selling at the close. These Black Friday days are not very reliable, but given the Wednesday close, it's a bit of relief for bulls. The overall risk remains to the downside until we close above the 20 DMA, but if you are short, a rally to that confluence with 200 DMA at 1480/1483 is enough to inflict severe pain. And pain is what the market knows how to dish out when the VIX is at 25.
The chart looks like it is ready to snap up and make a right shoulder, which of course would potentially set up a long term decline. But first, bulls will need to get to 1450, a level you can be sure has a lot of sell orders lined up (1449 is 61.8%). An interesting end of month battle is looming. Play it safe until the month closes, but watch that 5 DMA support for SPX if you are playing it shorter term.
Is it only me, but doesn't DELL look ready to give us an upside suprise? That would be one heck of a squeeze.
This entry was posted
on Sunday, November 25, 2007 at 11/25/2007 12:21:00 PM.
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