S&P 500 (SPX) : Review as of June 11, 2010

With the ‘huge’ rally yesterday and bullish closing on the indices yesterday, this will be a good time to review the Ichimoku Chart again.

Hopefully, it can provide us with some ideas of where this rally might goes.

From the Ichimoku Daily Chart, we can see the following:

1. Tenkan sen

SPX has a huge bullish move yesterday and close off with the price level above the Tenkan sen (see Pt 1 on my chart)

We can see that the Tenkan sen is also flat; suggesting price consolidation around this level; hence the whipsaw movements for the past few days.

2. Kijun sen (the trendline in red)

We can see a very sharp and downward pointing Kijun sen.

With the one day wonder from yesterday, the chart is saying the trend has not change yet. We may want to hold off the shorts and observe how the index plays out against the Tenkan sen (see point 1 above).

But, we may want to staggered the buying if we think this is the beginning of a bullish rally.

3. Thin Kumo Resistance

We can see from the chart, that the kumo is the thinnest before June 28.

A thin kumo suggest resistance is low. Likewise, we can also think along this line. The easiest way for this rally to hold and kill all bears is to go above the kumo before June 28. And that is a VERY STEEP climb.

4. Huge Kumo Resistance

If it fails to break through the Kijun sen (trendline) before June 28, we can see how the thick kumo resistance is waiting for it from June 28 onwards.

What do you think? My bias is still down for the overall trend.

However, I mitigate my risk by trading the shorter timeframe (specifically Intradays). And during intradays, my trading direction is different.

I do have shorts for companies like GS and RIG where they face obvious significant headwinds to move up.

By iam802

Trend trading with Ichimoku