Saturday, September 26, 2009

Market encounters head winds

Since crossing 950 after the bull-bear tug-o-war(as mentioned in the prior blog entry), the market
gained almost 14%. It has been going up for the last seven months and we are just below a major resistance area in the s&p500 index. 1100-1150 is another area that has shown some consolidation in the prior up-down moves as you can see in the chart, ie. the market does not shoot straight up but consolidate or sell-off before moving up. If the market sells off then 950-980 area should provide good support.If it goes below 950 and stay below it then we have a major problem and will lead to another downturn in economic conditions. But at this point , i think the market will consolidate between 950 and 1125 and eventually go up to regain new highs.