Tuesday, May 11, 2010

Hanging by a Thread

The SSE Composite Index closed at 2647.574 on Tuesday a mere 7.82 points above the August 2009 low of 2639.75. A case can be made for a possible low in the current time-price horizon--with the major caveat that if 2639.75 is taken out all bets are off and the market will be poised to trade at much lower levels. For speculators the risk reward ratio using a relatively tight stop is somewhat attractive to attempt a trade on the long side of the market. Aggressive traders may want to consider a STOP and REVERSE strategy since prices could fall precipitously if support levels are violated..
  • RSI is at 22.67--well within the oversold range
  • the cycle (blue arc) emanating from the 2007-2008 bear campaign is about to terminate which could result in a trend change or acceleration of the current downtrend.
  • Support may be found at the S6 support harmonic.
  • 50% of the range from the 2008 low and Aug 2009 rally is @ 2571.46
If the SSE finds support and begins to rally there will be positive consequences for the S&P. However if the SSE fails to hold current support levels and subsequently breaks lower--the consequences for global equity markets might be dire.

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