Market Trying to Rally

Given the bad news of late (only sounds good due to the TV spin doctor's twisting of the facts) the market is holding its own. The monthly chart of the SP500 below remains on a sell signal generated in April of 2011 at point "E" or 1370. If the market wants to rally for a few weeks or so we could see the area near 1350 as a possible magnet. The indicators on the chart in the second box (Yellow Rectangles) are still rolling over and the longer, slower indicator in the lowest box is approaching the zero line and its flattening trying to move sideways for a bit before it decides whether to go  up or down. The long term outlook still says we should see a move lower in the coming weeks and months ahead. The final target near 600 may take a few years to achieve.



The next chart uses another index to try and foretell the SPX's direction. It's a funny thing about favorite indexes that people use in forecasting as they only seem to be good if they tell the story the forecaster is selling, read CNBC here. The Shanghai Index is not often mentioned unless it is projecting a move higher. The SSEC is shown below and on a weekly basis has been very accurate. Here again we are on a sell signal generated in April.