The S&P looks good
The markets as a whole have lost plenty of value as of late but it appears as though at least one index is set for a rally. The S&P 500 is off by 13% since the beginning of the year but some technical analysis looks make it seem like we’re ready for a rally.
The 1250 line has been very important as a support and resistance point on the S&P chart. Since 2005 the line has acted similarly to a pivot point, the market runs all around the point, top and bottom but there is plenty of reason to give it credibility. The market has rallied well with each touch and there should be plenty of hope this will continue. Last time the SP500 reached this point it was followed by a rally back to 1425, this is a glimmer of hope in a market that is so ready to drop.
What is even more interesting is the candlestick pattern that is forming at the base of the recent drop. Right now there is one down bar followed by a doji. Dojis mark indecision in the market and at the bottom and top extremes, usually a reversal. If the market opens up big on Monday and closes with strength, it should be concluded that another rally will begin. A rally would also bring a full fledged morning star candlestick formation, which again at the bottom of the chart represents a change in direction and an upcoming rally.
RSI divergence is also forming on the weekly chart. This makes me feel good about a rally happening on Monday morning, some good news would double the potential for the next couple weeks. At this point, a long position looks good.
