Wednesday 10 March 2010
This weekly chart shows an up channel that captures the market activity,
to date. Back in July 2008, there was a reaction low at the 1200 area,
noted by "Support Rally" on chart, extended into the future. This past
support will/may act as resistance into the future, the broken portion of
that horizontal line. There is a second reaction low, from March 2008,
that does not show, but it is the higher horizontal line, drawn for the same
reason. The initial 1200 level would be the first potential resistance,
using past market activity as a guide.
The channel line extends into the future, as well. the top line would
indicate an overbought condition, the bottom line oversold, and support.
The top horizontal line from march 2008, and the upper channel line
converge around the 1250 area, another potential resistance, should
price continue to rally.
The one concern is the drop-off in volume. Demand is not that great,
and a lack of demand is hard to sustain a rally. However, demand was
not that great during the "POMO" rally last summer. Price is always the
final arbiter, but these ancillary indicators will ultimately have a bearing
on price. For now, the S&P looks higher with no ending action.