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| Stock Indexes Under Strain? |
By
Darrell Jobman |
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As the chart of the popular E-mini S&P 500 futures contract shows, the market has clearly been heading down since the first of the year, and the highs are getting progressively lower. Then combine the traditional chart signals with indications from VantagePoint Intermarket Analysis Software, and it becomes apparent why traders might be bearish:
See the chart at: http://www.tradertech.com/vpcommentary33108.asp
* VantagePoint’s predicted short-term difference (red line) has crossed below the predicted long-term difference (green line) and below the zero line.
* VantagePoint’s predicted Neural Index, a proprietary indicator, is at 0.00, a bearish reading.
* VantagePoint’s predicted medium-term exponential moving average (blue line) is on the verge of crossing below the actual medium-term simple moving average (black line), the final step to suggest a short position might be in order.
Note what happened to E-mini prices when those conditions occurred together in the past (arrows). If the moving average crossover materializes, the initial downside target would be the double bottom in the 1253-1255 area (dashed line).
Going back to traditional chart analysis again, the recent E-mini action might be viewed as a descending triangle with the breakout generally going through the bottom flat side of the triangle as the market resumes the trend it was in when it went into the triangle. If that line gives way, the mid-2006 lows in the 1220 area become the next target.
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