Previously I have outlined why I went from bearish to neutral on intermediate-term outlook, but now I am becoming increasingly bullish on SPX in the short-term.
Prior to today my short-term (end of 2011) target for SPX was 1250 - 1300. Since 1292 was reached last Thursday, I have to say that I may have underestimated the resolve and strength of bulls and weakness of bears. Most importantly, chart formation in short-term looks more favorable to slightly more bullish bias. Many resistance levels and moving averages were pierced, with multiple closes above them.
So I have a feeling that rising 50 dsma (1192 currently) is going to be very supportive for price and may become a floor on this decline (in progress), which will be roughly 50% fib retracement of bull run from Oct 4 low.
Obviously, there are risks to my assessment, some of which are Greek Referendum and US Debt Super Committee. If those event fears push SPX below 50 dsma, remaining unfilled gap at 1156 should provide further support. I think that exogenous event-driven pullbacks will be gifts to US stock market bulls.
My year-end target goes up to 1320 - 1350, based on my fib extension projection and confluence of trend lines.
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