Trading plan for June 17, 2013
Weekly Outlook - S&P500 Cash Index (SPX)
The S&P 500 cash index ($SPX) closed at 1626.73 on Friday, down 16.65 points for a 1.01% net weekly loss.
The SPX had a wild ride last week, running up for the high on the first day of week. But it failed to hold the gain; at the end, it surrendered 16 points.
This week the concerns over the Federal Reserve tapering off monetary easing measures will continue to weigh on investor sentiment until Wednesday's FOMC report.
The Wall Street Journal's Fed watcher Jon Hilsenrath is widely perceived to be the mouthpiece for the Fed. He suggests the recent mixed messages from the Fed are causing some concern, which in turn is prompting investors to take more defensive investment decisions — taking a little money off the table while the market still is high.
SPX Weekly Chart
For the short-term the strength for the upside has been diminished since $SPX made new highs around 1687.18 on May 22. The price has been in a short-term correction process since then. But price hasn't breached its major short term support zone at 1580-1575 yet, which still maintains a bullish condition for the longer term.
So far $SPX still trades above the 1600 psychological support level. At the same time, $VIX moved 50% above last month's low and was unable to move above the 18 level last week, which possibly hints at higher volatility ahead. We also have a Fed meeting scheduled for this week and quadruple witching on Friday. Stay tuned.
For the long term, as long as $SPX doesn't break down long-term uptrend channel (green channel) the bulls will continue taking control.
Monthly resistance 1685 and support 1575; Weekly resistance 1675 and support 1575
Daily Outlook - S&P500 mini futures (ES)
Daily Chart ESU3
ES attempted to fill the rollover gap at 1636.50 and failed.
The failure triggered bearish sentiment Friday and the selling pressure was increasing after 10am. At the end, ES closed under the lower trading range and lost 13.25 points on the day.
Based on the daily chart, ES remains inside the short-term downtrend line. The short-term downtrend resistance line and intermediate-term uptrend support line (blue) form a triangle pattern. ES could stay inside this triangle pattern until Wednesday.
Long term uptrend remains bullish. But the short-term is bearish and intermediate-term is neutral but favors the selling side. As long as the price hasn't moved outside the short-term downtrend channel it still has a chance to drop back down to the intermediate-term uptrend line in the1600 area for testing.
Date Added: 2013-06-17 08:11:09