From the mindset of the Institutions, the S&P 500
represents the "strength of the economy" because
it represents such a
good mixture and diversity of economic sectors in the country. What
the
S&P 500 does, they pay attention to ... as they regarded it as
a business barometer.
It is the reason why we
will show two important charts on the S&P 500 today and what they
are
saying about a Christmas Rally.
Our first
chart below shows the S&P 500 and our Bull/Bear Strength Levels
index. At the close yesterday,
the Bull/Bear Index had
its fast grey indicator line move into Rally Territory for the first time
since August.
Its Red/Blue trend lines are still in Neutral Power
territory, but are trending up nicely. This is a positive
reading
about the current trend direction of the S&P Index.
As
the Bull/Bear Index trends up, it won't be happening without technical
challenges as you will see below ...
This next
chart is a close up of the above chart with its Fibonacci Levels on
it.
First, note the positive trending of the Bull/Bear
Strength indicators below. Next, look at the S&P 500's
price
chart below it. Since the beginning of 2003, the S&P has climbed
up and challenged every
Fibonacci level below.
- We
first had the S&P move up to the 50% Fibonacci level and like clock
work, it bounced off of the
level and
retreated.
- It then went down to an exact 38.2% golden Fibonacci
level, held and bounced back up.
- It then tried unsuccessfully
to rise to the golden 61.8% level and pulled back to the 50%
Fibonacci
level where it found support.
- Next,
it ramped up and successfully moved up to the 61.8% Fibonacci level ...
and then retreated.
- In October, the S&P consolidated and
then started re-challenged the Fibonacci 61.8% level.
-
Last
Friday, the S&P moved above the golden Fibonacci 61.8% level ... and
yesterday, it successfully
moved higher above it.
*** Both, the Bull/Bear Strength Level and the
S&P 500 have strong positive conditions for supporting
a Christmas
Rally. There is one significant upcoming challenge to an
extensive rally worth noting ... please
see the next chart
...
What is the
significant challenge for the S&P 500 rally worth noting?
Below, is a
close up of the first chart we showed today. Note the red, top 2 year
resistance line that
the S&P has not been able to penetrate.
As
of the close yesterday, the S&P was 20 points away
from reaching
this resistance ... a little over 1.5%.
*** The key to a
Christmas Rally continuation, will be what the S&P does when it
reaches this point.
The S&P previously reached this
resistance 4 previous times and pulled back each time. If it rises
above it
this time, the rise will be accompanied by an "investor
buying fever" that could give us some very fast "up action".
|