Jun 16, 2011

Is Market Turn Point Close?

S&P500 has recently dropped more than 8% from its peak on growing concerns over the strength of the recovery. After riding the optimistic wave investment crowd fell in the trap of its own expectations.
Now the broad index, S&P500, reached 200 moving average. This is strong technical support which is expected to sop the decline. At least for a while. Index oscillators are showing extremely negative values indicating oversold pattern. The slow stochastic lines are crossing below 20, a case not seen since last September.
s&p500_outlook_16-06-2011
S&P 500 Touched Important Support Level (200-Day Moving Average)
Chart source: stockcharts.com, Chart analysis: investink.net
At this point it is worth playing long but be cautious. Rally is expected to occur but only supported by good fundamentals. The upward move is limited by 50 moving average at 1323, some 4% gain. Fail to mark new index top above previous (1376) would form negative short term trend and additionally push the prices down.

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