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6.20.14 “S&P 500 The Balloon $SPY $SPX”

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7.3.14 Thursday

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S&P 500 Old Resistance New Support

[$SPX Daily Chart]

This chart showed that the old resistance (red arrows) is acting as new support (green arrows) as we have seen this happening time and time again. This chart actually suggests that we may get 2-3 months of bullish run before a steep decline back to that red line uptrend support.

[$SPY Daily Chart]

As the market pulled back, bears met with this pivot level of “old resistance new support” yet again.  This chart was screened in the morning of June 26th as to convey the message that as long as we are above this pivot (green arrows), benefit of the doubt continues to go to the buyers (obviously, we would want to see this level getting protected by the buyers).  Well, that afternoon, the buyers came back and did protected the level putting the price back up.

[$SPY Daily Chart]

Today, you can see that once that pivot level has been protected and served as new support, the trend continued higher ending this week with much bullish tone.

For the next few weeks, I would watch 10 and 20EMAs as supports should the $SPY pulls back.  Ultimately, bulls want to see this pivot level (rising blue dotted line) holding for the trend to continue possibly next 2-3 months.  Again, as long as we are above this pivot, the benefit the doubt continues to go to the buyers.

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Dow Jones Industrial Average

[$DIA Daily Chart]

Similar to S&P 500 sentiment here as the old resistance (red arrows) has been acting as new support (green arrow), and in the midst of that, we have now established uptrend support (rising red line) thus cultivating higher-lows and higher-highs (trend is up).  I think as long as we are above this rising uptrend support, benefit of the doubt continues to go the buyers.    Today, we made new highs.

Russell 2000

[$IWM Daily Chart]

It has now (pretty  much) completely nullified the potential H&S formation as we are trading at the highs close to $120ish.  Trend is up as we have been cultivating higher-lows and higher-highs (red uptrend support).  Last three days, we have formed some kind of bull pennant pattern which looks like a bullish formation to me if we can breakout to the upside early next week.  If we can get well above $120ish, I do think the run could continue higher.  Gauging it with 10/20EMAs would help on any pullbacks as it moves higher.

NASDAQ

[$QQQ Daily Chart with 10EMA]

This is what I would call, “Sensationally Bullish”.  10EMA has been acting as phenomenal support (see arrows) and I guess on any pull backs in the near future, 10EMA is level to watch.  Just from the pure price action point of view, it does look like we may have some pull back next week though. Possibly back to 10EMA?  If there is any sizable decline occurs next 2-3 weeks, 50EMA is probably the next support area (currently residing in $91ish level which coincides with 3/7 high).