Weekly Summary

Alright here we go, last day before august what a crazy month, I still remember how so many bears just got burned in the beginning of the month where the talk of head and shoulders pattern( even on CNBC）really came out to be a hoax. Luckily I am not with the bears, closed my short position before the big run up. Now after the big run many analysts are calling SPX going all the way to 1000, some even calling 1200, well I think we could do that but we should be careful, a good thing can turn seriously bad when too many people know about it. Also this month many companies reported their earnings, they are generally good due to cost cutting(layoffs and such) that really give market a push, today US GDP for the quarter came out to be better than expected, another good news, so the market is basically willing to rally on any kind of good news now. We barely closed green today on S&P and Dow, and Nasdaq took a bump due to the yahoo news, basically we end the day breaking even.

SPX weekly chart

















Now we finally breached the inverse head and shoulders neckline area, where are we going next? well from the trendline all the way from before the big drop in 2008, we can see the we might be looking at testing the 1200 area. Technical Indicators are looking very bullish on the weekly chart with 3 consecutive positive volume and SPX finally moved above the 50 day MA. RSI are trending upward nicely with no negative divergences, MACD finally moved above zero in almost 1 year and 7 month, ADX also showing some strength with positive DI line moving upwards.

Lets take a look at the VIX


15 min chart vix shows us some activity today in the options market. We opened lower today as the market moved higher due to the GDP news, and we really just consolidated in the mid range trying to move higher but the bulls just kept it there until late in the session where you can see a 2 green candlesticks showing big upward momentum and momentum breach of the resistance I drew, good thing it failed and we closed below the resistance. In my opinion, vix could stage some kind of run in the short term but bulls got nothing to worry about as long as it holds below this long term trend line.