A Unique Moment for the S&P 500

Jun.21.09 | About: SPDR S&P (SPY)

It will be difficult in the future to see a unique moment like this for the S&P 500 (SPX).

The unemployment rate is higher than 9%, and all are "happy" or minimize it with some data about jobless claims that could be misleading.

General Motors (GMGMQ.PK) has gone for Chapter 11, and the media all tried to minimize this: 100 years of industrial American history gone to the wind.

Inflation is going to decrease in some geographic areas and start generating deflation, the real monster for business recovery.

In this strange and even ironic (for some reasons) economic context, the cyclic moment for S&P 500 is at the top, and the odds for a trend reverse are high - very high.

As you can see from the charts, the S&P 500 cyclic indicator is high, and it is going to go down with the market. The market itself is near the 20 period monthly moving average, and it has just started to fade. Even the monthly Stochastic indicator is enough high to call for a fall, and the monthly MACD is still well below zero.

This week will be crucial. A break of 890 could be the signal for a bear movement of some weeks, with the favor of a new major cycle starting, and with the favor of monthly indicators. On the contrary, the bull will survive only above 946.

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