Week 20 (17th May-23rd May): Weekly Moo River Watch on America (SPX500)

SPX500

(based on 30 year advanced data charts)

Yearly


It is a classic case of yesteryears' support turned into resistance as we have been suffocated under the bollinger midline here.

All momentum indicators are bearish, guess it just confirms the fact that we are stuck in a bear market, some call it the greatest bear market in history, only if you are a bear a perpetual pessimist.

Quarterly

Strangely, the price chart somehow looks like a flat battle zone between bulls and bear, from Q2 in 1997 to date, where we are basically stuck between 1546 top and 772 bottom.

For the same price range, it seems that momentums have collapsed even deeper down to seek support for a bounce this time round. so in terms of momentum indicators, it does not present a flat battlezone. It is quite tricky, either it is an ABC corrective wave before we push for more historical highs, or it is a 5 wave impulsive move down, to push the market into levels not seen for decades.

The election of Obama as the first black US president is indeed a historical event, as he takes on a historical challenge, either to continue this productivity push into unknown territory or to prove there is a limit to growth, even for an Empire like the United States.

Monthly

The bullish signals are here that we could have ended the bear market in March already, if you like to draw parallel lessons from 2002/2003.

Here are the similarities:

1. the layout of the candles are of a similar pattern, with a green candle for the bottom of the bear market. In truth, this bounce is even stronger.

2. rsi and other momentum indicators are all showing similar reversal patterns and this time, the W on rsi is more obvious and better formed.

Still, even though we might speculate we have seen the lowest of the bear market already, if history is any guide, then there will be another dive to sub 800 level, just to find out the resolve of the bulls. It is suggesting midsummer challenge to any over-enthusiastic bulls.

For now, rsi has just carved through 30 and stoc is climbing out of the bottomline, so a near term challenge of 960ish is imminent on the price chart, though psychologically, one wonders whether an overdrive to kiss upon 1000 is also a plausible prospect, though not supported by historical evidence.

Weekly

This is where the drama kicks in. Looking across the price and momentum indicators, it seems that it might surprise some laidback bears here with a dramatic rise this week, out of the blue, almost. Either that or we test the key support of the bollinger midline near 835, which will bring rsi to a challenge of 40, but there, there is a room for a big surprise as the upstream moo river has two upperbanks and one lowerbank. We carved through upperbank 1 in Week 13 and is now lying upon it for support. A dramatic Monday overnight in Asia will take bulls to heady heights with little pullback.

This week is not for the faint hearted.

Good luck.