My thoughts on the S&P 500 on June 21, 2009

Since the beginning of of June, the bulls and the bears are still in a very tough fight with close to a draw.  As highlighted by the purple box above, we had been in a range for almost 2 weeks until June 16, 2009 when we pierced through the 930 support after a slew of ill-favored economic data such as the housing market index, empire state manufacturing index and the gloomy comments made by the FED-EX CEO, Frederick Smith,  noting that there wasn’t much sign of business improvements for the near term. 

From there, we started crashing down breaking that key 930 technical support which sparked a fairly huge sell off beyond normal trading activity with roughly about a -2.4% on the S&P.  But what amazed me most about the trading activity since June 15, 2009, was that the 200DMA, the red line, really acted as a very strong support ever since it was broken on June 1, 2009. 

MACD & Stochastic is telling me that it might be ready for another run on the upside.  But I will be watching out for the 930 level to see if it is capable of breaking it again. 

Alot of people say that this market is tired and is surely due for a pullback and I wouldn’t disagree myself.  But I am going to let the market tell me where to go and not those people on TV.  Thus as of now, my position is not really biased to the bullish side or the bearish side.  I still kept many of my longs with a hedge against those through the purchase of SDS (an inverse S&P 500 ETF). 

With Q2 earnings season coming around the corner, the market has really raised its expectations this time compared to Q1 where anything slightly better than bad is good.  This time, the market is looking for signs of recovery in alot of these companies’ earnings and what will matter most is their thoughts about their future earnings for the remainder of the second half of 2009 as many economist are predicting this recession to end by the end of this year. 

VERY EXCITING INDEED!!!!!