US indices set to move up in short-term?

Hey all,

As the year 2011 draws to a close, I will write about my year regarding technical analysis. Equity-wise, I did not do too well. Though, I did have a good year in the forex market. Anyway, I will put up long-term charts on the equity indices next year. For now, I am seeing events on the charts of US indices. Let’s take a look at them.

The S&P 500 ended the year flat, though we had alot of volatility throughout the year. Looking at the chart below, you can tell US stocks traded in two separate regions. The dividing level was 1275 for 2011. Going back to 2010, you can see an important resistance level at about 1220 (red line). After the US debt downgrade this year, the S&P 500 found resistance right at that level too. Though, that line did get violated (in purple box) towards the downside after we broke through once; if I’m not wrong I had a post about that. Anyways, the important thing is that we are clearly above 1220, and looking to test the important 2011 level of about 1275. We did break through it once this year, only to reverse all the way down. So, in the short-term ahead, any upside should get up up and above the important resistance level of 1275.

Now, my post today is centered on an unconfirmed chart pattern I see on the US indices’ charts. Flirting around the 1220 level, the S&P 500 ended up forming an unconfirmed inverted head and shoulders. If you have been following my last few posts, you will know I identified an unconfirmed, good-looking inverted head and shoulders in the STI, that now seems to have fizzled out into either a failed pattern or one with unexpected downside breakout. Nevermind that, I believe in sticking to my guns and not giving up after a failed pattern. Once again, I will be leaning towards the bullish side for US indices because of this inverted head and shoulders. The pattern comes at a time when the S&P 500 is looking to break through the resistance that was once support before the US debt downgrade. So, what better than a chart pattern to act as a catalyst for a rally past the resistance? Key support for this unconfirmed pattern is 1200. If we do experience selling pressure instead of buying pressure in the weeks ahead, 1200 is the leel to watch. Breaking down below 1200 means one of two things – we have a downward breakout from the inverted head and shoulders, or we ahve to render the pattern invalid and take it off the chart.

The next few charts you see below are charts of US indices with the small inverted head and shoulders.

  

Finally, I have a longer term view of charts of certain indices to show you all. Is a huge head and shoulders in the making?

   

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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