Wednesday, June 10, 2009

SPX Cup and Handle?

Looking at the past month or so of action on the 60min SPX chart you can sort of see a decent cup and handle pattern. The formation isn't the most perfect one I've seen but nonetheless the consolidation during the past two weeks has given the chart a nice little "handle" shape with resistance above at roughly 950. The jury is still out whether or not this pup breaks out or not but you gotta be prepared for anything.

I have actually been starting to be more cautious as I think we are nearing an area where we may retrace from. BUT, that is only a hunch, and I don't trade off hunches. Some indicators on the 60min and daily charts are showing negative divergence but as long as this consolidation continues I think it's prudent to respect the possible cup and handle in progress.
If the SPX can finally close ABOVE 950 then I still have a short term target of 989. Really could go either way here but keep an eye on the dollar weakness and EUR/JPY cross to possibly signal what direction the market takes.

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