US Stock Indices - Short-Term Outlook

In these updates our focus is to identify the trend on the daily chart – the so-called Short-Term (ST) trend (this trend usually lasts several weeks to several months) and to formulate a hypothetical trading strategy that usually seeks for 80-140 point moves in Nasdaq100 risking 30-60 points and 50-90 point moves in S&P500 risking 25-40 points. This analysis is updated biweekly: before the open each Monday (usually during the weekends) and before the opening bell on Wednesdays.

Nasdaq 100
S&P500

Main analysis

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Update for: 2010-08-30 - 2010-09-05

Posted on: Saturday, 28 August 2010 21:02

S&P500: 1064.54

Short-Term Trend: sideways

Outlook: The Short-Term downside pressure has remained intact. The small bear market from the Aug top is now unfolding in a typical way: sharp declines and sharp intra-day bear market rallies mainly due to oversold conditions (as resulte these bear market rallies are then quickly retraced). A larger bounce occured on Friday after the second attempt to break below the important 1040 level failed. But this bounce is likely just another small bear market rally. At least, if it is not, there is no way for us to know that right now. For that reason we remain bearish and continue to favor the short side here. A decline below 1040 will likely bring panics in the market, something that we haven't seen so far during this decline.
On the upside, only a move abv 1075/80 negates, risks larger rally twd 1100 and then a re-test on the 1130 key resistance level...

Strategy: Holding short from 1098 is favorable. Stop=1083. Target=995

Next Update: Wed, 09/01/2010, before the opening bell.

Brief updates

Posted on: Wednesday, 01 September 2010 07:36

S&P500: 1048.29

Short-Term Trend: sideways

Outlook: The market has traded sideways between 1040 and 1060/65 for the past 5-6 days. That consolidation is either a continuation pattern and the previous decline from the Aug top will resume very soon, or it is some kind of a basing before a thrust higher twd the 1100 level. A this moment we favor the downside and expect a breakdown to occur soon, but if the index manages to close abv 1070, then the odds will favor an upmove twd 1100. Thus, we are now lowering the stop to our hypothetical short position on this time frame.

Strategy: Holding short from 1098 is favorable. Stop=1073. Target=995

Next Update: Sun, 09/05/2010.

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