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SPX: Consolidation and Early-September Top?

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Author: Arthur Eckart

Short-term SPX prediction.

The SPX daily chart below shows intermediate-term technical indicators remain bullish. However, NYSI (above price chart), which has been making lower highs over the cyclical bull market, suggests SPX may reach an intermediate-term peak in early-September, and fall sharply into October. Also, in early-September, the NYMO 50-day MA may reach an overbought level, around 20, and the CPC 50-day MA may become less bullish (both below price chart).

Last week SPX rallied on a four-day short-squeeze, rising to a three-month high, and closed the week at the high above 1,302. Consequently, short-term technical indicators are severely overbought. The short-squeeze may be completed Monday, if not already finished, and a pullback or consolidation should take place next week. SPX may then rally into the new month and the Labor Day holiday September 4th.

Major resistance levels are 1,300 to 1,310 (extended Price-by-Volume bar of March to May consolidation), and 1,326 (yearly high). Major support levels are 1,290 (early August high), 1,275 (previous support & resistance, 200-day MA, and middle of daily and weekly Bollinger Bands), and 1,261 (breakout point of recent rally, and 50-day MA). SPX may test 1,275 next week, given overbought short-term indicators.

Free charts, market forecasts, and other information available at http://www.peaktrader.com

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.