S&P 500 technical analysis with Turning Points update by Andre Gratian

Andre Gratian provides technical analysis for the S&P 500 with his Turning Points service, and is always included in the sites list at right. He is visiting family for the holidays and won't create a complete new report this weekend. But his previous weekly updates provide his big picture context for the S&P 500 (use the "Turning Points" label to locate here anytime). And his chart update below, written near the close on the most recent trading day sums up what traders need to know for the technical analysis picture coming up this week (with his intraday comments for subscribers - you can get a free trial by contacting him at his email address, shown below):

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From: "Andre Gratian" ajg@cybertrails.com
Date: December 24, 2009 11:18:14 AM EST

The indicator that I have been waiting to give the final high signal is finally waking up and has entered the danger zone. Now the market could reverse at any time!

Be careful of a close below 1112 on the SPX! It could be the beginning of the intermediate correction that we have been looking for providing that it keeps going and closes below 1100. That would put it outside both the blue and black channels!

Below is the chart to reference for the SPX. I have adjusted the up-channel to better reflect the short-term trend from 1093.88. Breaking the the trend line would probably lead to another test of the bigger channel lines around 1100.

We've broken above the blue channel resistance line which has allowed prices to rise to fill the 1127 target. So far, we've reached 1126.29.

The minor cycle was to make a low ideally in 2-3 hours and may have been overpowered by seasonality which caused a buying surge at the opening. There are greater forces at play and we should be keenly aware of them!

-- The SentimenTrader gauge is now signaling a long-term sell signal, which it has not done in a very long time.

-- The SPX reaching 1127 could cause an important reversal, especially since it is being reached coincidentally with the QQQQ near its long term 46-46.50 target. It is now trading at 45.81.

-- The hourly indicators are overbought and overdue for a pull-back.

-- The daily indicators have now reached overbought.

All this suggests that we are at or near an important top. We could still reach 1130-1135 after another short-term correction. It all depends on our ability to hold about 1100 on the SPX.

Andre