S&P 500 (SPX) : Ichimoku Chart Review as of June 15, 2010

Yesterday, the market scores a follow through the 3 indices going up by more than 2 percent.

On the Ichimoku Daily Chart, we can see that the SPX close above the Kijun sen (trendline).

At this rate, there is a possibility that SPX may pierce through the kumo resistance at around 1040 before June 28.

Do note that there aren’t much news that push the indices up yesterday. So, likewise, any bad news can sent them tumbling down as well.

What I would like to highlight is the possible development of a head and shoulder on the Daily Chart.

If SPX goes to around 1050 and reverse and stay below the kumo, be prepared for a very nasty downwards drop.

A head and shoulder confirmation could sent the SPX going as far as 880.

1. To get the target price, subtract the top of the head from the neckline (ie 1220 – 1050 = 170)

2. From the neckline (around 1050), subtract 170 and we will get 880.

Incidentally, 880 is a level around the kumo support on the Weekly Chart.


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.


3PAR (PAR) : Long legged doji (Possible reversal)

Spotted a long legged doji yesterday which signals a possible reversal may be coming soon for 3PAR.

After all, it has run up a fair bit  since the speculation of it being acquired.