Indices Analysis: S&P 500 Enters Bearish Phase After Breaking Bull Run
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The S&P 500 has been widely used as a bellwether for the US economy ever since it was published for the first time in 1957.
It is an index of the top 500 companies in terms of market capitalisation trading on the NASDAQ and New York stock exchanges.
The index has been in a relatively strong bull market since September 2010. This started to lose momentum at the beginning of March and since then the market has moved mostly sideways.
On the 3rd of June 2011, it closed below the Ichimoku cloud for the first time in quite a while, indicating that the bull run has finally been broken. On the 6th of June the S&P 500 formed a new low of 1285.90 and continued to trade generally downwards, forming a new low of 1264.90 on the 15th of June.
Currently the market is somewhat directionless, as can be seen by the fact that the blue Kijun Sen line in the chart below has turned flat.
The big picture on the technical analysis remains bearish, however. The green Chinkou Span line is well below the price of 26 periods ago and the price is below the green Ichimoku cloud, whilst the red Tenkan Sen line is also below the blue Kijun Sen. All this adds up to a clear indication of a short-term downturn in the price.
Some analysts believe the price is forming a double bottom before heading up again. This will only be confirmed if the price breaks upwards through the Ichimoku cloud in the near future, which is currently quite far away at 1332.95.
Any move below the recent low of 1257.90 will be a clear indication that the bearish sentiment is winning on the S&P 500 index spread trading market and we could soon see new lows.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 29 June 2011).
Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade. Neither InterTrader nor CleanFinancial.com accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
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'Indices Analysis: S&P 500 Enters Bearish Phase After Breaking Bull Run' edited by DB, updated 29-Jun-11
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