S&P 500 Index (SPX) Will Test Correction Lows
Says Market Timer Frank Kollar
August 27, 2010 (FinancialWire) (By Frank Kollar)
Both the S&P 500 Index (SPX) and it's tracking ETF
the S&P Deposit Receipts (NYSE: SPY) are headed for
a test of their correction lows in coming days.
On Thursday, August 26, the SPX rallied at the open after
new jobless claims came in at 473,000, 27,000 less than
the previous week’s 500,000.
The rally reached the prior support level at SPX 1060
and reversed, closing at 1047.22. The 1060 level was critical,
marking the July correction lows as well as the 61.8% retracement
support level for the entire July to August rally. The
SPX 1060 level was broken in Tuesday’s August 24
gap down decline and on Thursday it acted as resistance.
Thursday’s action almost guarantees a test of the
early July lows at SPX 1010.91. For the SPY it is at $101.
Other bearish indicators are; the break of the rising
wedge pattern three weeks ago, the SPX being below both
its 200-day and 50-day moving averages and the 50-day being
below the 200-day average.
Not to mention the growing unease among investors worried
about a double-dip recession. The test of SPX 1010.91 is
just ahead.
Note, the Dow is now below 10,000 and the stock market
is oversold. Tomorrow’s GDP second quarter revision
report will without a doubt move the markets. Investors
are expecting the worst so anything equal to or better
than expected could result in a “sell the rumor,
buy the news” rally.
But even if the market rallies, we are back to business
next week.
The Fibtimer.com (http://www.fibtimer.com)
ETF Timing Strategy has a position in the S&P 500 SPDRs
.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com)
which offers market timing strategies for S&P and
Nasdaq index fund traders, as well as bond, gold, small
cap, sector, ETF and stock trading strategies.
Kollar’s research has shown
that the financial markets are in tradable trends approximately
80 percent of the time. FibTimer strategies define trends
and trade them in both advancing and declining markets.
Caring nothing about what newscasters say or what the
latest economic indicator predicts, trends are where
the profits are, and that is where FibTimer is.
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