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Global Trade Desk- S&P Upcoming Technical Test

Daily Client Note

Equity Review


S&P 500 4-Hour Chart

S&P 500 futures are trading in the price range set in Jan, Mar, Apr, May, and Jun 2011, between 1290 and 1350. The 4-hour charts offer a dramatic technical display that reflects the impact of manipulative quantitative easing (QE) programs on equity indices trade.

The 20, 50, and 100-day SMA area at 1310 were called out as areas that were likely to be tested technically before the next major upside leg could easily break 1360. Traders saw that move transpire, and must now be patient while waiting for the near-term signals off a break above 1320, or below 1295

No mid-term long signals will form on ES until a Weekly chart closes above 1355. No mid-term short signals will form until a Weekly chart closes below 1275. Clients will be updated if either move looks sustainable.

Market mechanics are not revealing which direction will offer the path of least resistance, and July is unlikely to easily form a sustainable long or short trend without a huge increase in daily participation levels.

b

ABC Potential:
The A leg looks to have formed with a break higher from 1255 that tested 1355 resistance. The B leg reversal to support at 1305 indicates that the C leg could technically move higher, but will struggle to hold above 1355.

The 1375 area is the outside target range for even the most bullish of equity outlooks. A more realistic view would be to see volatile intra-day moves in reaction to earnings reports that struggle to break previous session highs and lows with ease.

This Week's Call To Action:
Theses charts reveal an inability to create anything other than synthetic trading activity on a daily basis via earnings and debt-related news-wire headlines reactions, which will become exaggerated as the market is taken off the Federal Reserve intravenous liquidity drip feed. 

A 4-hour chart algorithm signal was generated Jul 11 11 with a move below 1310 which targeted 1295, and has completed its cycle.

German Dax 4-Hour Chart
The Dax reversed off the high of Feb and Mar 2011 around 7500 as highlighted to clients last week as being highly likely. The equity bourse is in a price channel that has support at 7050 from Jan, May, and Jun 2011, and an upside resistance area at the yearly high set in May at 7650.

The 200-day SMA area at 7050 stopped the recent fall from grace being any more severe than it was, and set up a solid support area for Dax bulls to work higher from. It was reported last week that 7200 would be an area highly likely to be tested technically before the next major upside leg could easily hold.

No mid-term long signals will form on DAX until a Weekly chart closes above 7650. No mid-term short signals will form until a Weekly chart closes below 6950.

n

ABC Potential: 
Choppy and overlapping technical waves throughout 2011 have left an unclear picture of what is to come in the near-term.

This Week's Call To Action:
Theses charts reveal an inability to create anything other than synthetic trading activity on a daily basis via Euro-zone headlines and economic outlooks. Caution and near-term targets are needed when trading the German Dax ahead of July earning season reports.

A 4-hour chart algorithm signal was generated Jul 12 11 with a move below 7010 which targeted 6950, that failed to trigger.

Japanese Nikkei 4-Hour Chart
The Nikkei is back inside the sideways channel formed through Mar-Jun 2011, which has 9350 support and 9900 resistance, which was broken but was unable to hold last week. This is undoubtedly the ugliest of global asset class charts. The price action is sporadic, volatile, disjointed, and very unappealing.

The 100 and 200-day SMA area at 9850 will create an area that is likely to be tested as support again before 10200 breaks and holds on a Weekly chart.

No mid-term long signals will form on Nikkei until a Weekly chart closes above 10250. No mid-term short signals will form until a Weekly chart closes below 9450.

u

ABC Potential: 
Choppy and overlapping technical waves throughout 2011 have left an unclear picture of what is to come in the near-term.

This Week's Call To Action:
These charts reveal an inability to create anything other than synthetic trading activity on a daily basis via global equity indices headlines and economic outlooks. Caution and near-term targets are needed when trading the Japanese Nikkei.

A 4-hour chart algorithm signal was generated Jun 22 11 with a move above 9750 which targeted 9850, that completed its cycle a long time ago. There really has been nothing generated since that time.