Thursday, June 3, 2010

Dances With Bears

The major markets continue their dance with both the exponential moving averages and the Fibonacci support and resistance levels (S1, S2 S3,S4 R1,R2.R3,R4). While the S&P 500 is experiencing problems getting through the 200 day EMA (from below) the other averages are holding ABOVE the 200 day EMA but experiencing resistance at the 21 and/or 55 day EMAs.

As the markets enter the first June Energy Date period a resolution to this may be at hand. A break to the upside would set up tests of the nearest EMA (above) whereas a break to the downside would test the 200 day EMAs. The behavior of the S&P may reveal what averages will come under pressure. A break above 1108.50 will set up a test of the critical 1125-1135 level.(55 day EMA & Fibonacci harmonic.)
As the moving averages converge there quite possibly will be an increase in volatility as the energy in the markets get compressed and set up for a violent break one way or the other. The markets--and the world in general-- are entering a cyclical period which portends great danger.

Friday's Pivots
R2: 1113.96
R1:: 1108.40

Pivot: 1100.10
S1: 1094.54
S2: 1080.68

right click for enlargement options

The chart below shows the distribution of Fibonacci levels for the Transports and S&P Midcap.
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