12/29/13

With the S&P 500 hitting all time highs in the 1840-50 area over the holidays, it is worth looking at the long term charts and pointing out that we are potentially testing a top of a weekly channel that goes back to the 2009 lows. In the short term, the market does look a bit over bought. The daily chart on the S&P 500 actually has some divergence on the OBV which could be hinting at a decent retracement. The flip side, however, is that a bullish flag is forming. The weekly channel that goes back to the '09 lows is an upward trend., after all.

It's definitely tough to call now, but I can't help but continue to see signals of an overbought market in the S&P 500 for the short term. Other indexes look slightly stronger.

For tomorrow, 1835 is support after a breakout of a channel on the S&P Daily Chart. If we get decisively below this, the next stop would be 1800 - 1802. A good bounce off of 1835 however would be pretty convincingly bullish and set us up for 1880-1900.

I think 2014 will bring further gains. Retracement on a larger scale than recently seen is due, but that would probably still keep us close to or in the 1700's if you look at the weekly channel.

S&P 500 Weekly Chart

S&P 500 Daily Chart