By John Pisanchik

Well the rally came to an end when the S&P 500 Cash Index hit the wall at 1099 on Tues, Wed and Thurs. Today’s drop puts an end to the 2 week rally. During this rally, the bulls were sucked in and today is a testimonial to just what the bear can do. I would expect this weakness to continue next week and we should see a test of the 1011, which are the lows set about 2 weeks ago. Have a great weekend and happy trading.

By John Pisanchik

The market continued to demonstrate some strength here but caution is still the keyword. Volume has not been real heavy in this rally, which means there is not a huge following, and we are fast approaching an area of resistance. That area has 3 major resistance points and are 1089, 1100 and 1115 in the S&P 500 Cash Index. Bear them in mind as the market moves higher. Happy Trading

By John Pisanchik

This week the market found support at the 1011 level in the S&P 500 Cash Index and rallied each day. I am still bearish, however this rally has moved upward rapidly but  it has been on reduced volume. That is a red flag indicating this is simply a short covering rally. There is major resistance at 1089 and could potentially stop this rally. If it cuts though that resistance point, the market should trade towards 1115 in the S&P 500 Cash Index. If you are long, beware a rapid turn around. Happy Trading.

By John Pisanchik

This past week was a very important week in the market because some very significant things occurred. First, the market broke below the 1050 level in the S&P 500 Cash Index, and stayed below that on a test. Second, it continued lower and hit a significant support level at 1011, bounced from that and held for at least a day.  This new week will let us know just how sever the downswing will be. The signal will be how it continues to react to the 1011 level. It is a significant support level, so if it goes through it rapidly, then the next objective of 942 will be met pretty quickly. So the market may chop around a bit just above the 1011 level. A close below that is a signal of continued weakness and a most probable move to 942. Hope you had a great Holiday weekend, and Happy Trading.

By John Pisanchik

Today’s market provided a small bounce early in the day to retest the 1050 level as a resistance point. The high was 1048 so the resistance came in on schedule. After that held, the market stayed in a very narrow range with the move on the day coming in during the last 30 minutes, closing at 1030.7 in the S&P 500 Cash Index. The next leg of the bear market has started, as far as I am concerned.

On May 26, 2010 I wrote: If we close below the 1050 level then the next real support level will come in at 1011 and we could see some form of bounce there. If that level does not hold, the next support level is 942. The 942 level is another very important point and could provide strong support even in a market like we are experiencing now.

I still hold this analysis as the most likely objective. The next leg of the bear market is here and I believe 942 is the objective for this leg. The variable I cannot predict is how long it will take to get there, however bear markets historically have rapid moves. Happy Trading

By John Pisanchik

The market closed below the all important 1050 level in in S&P 500 Cash Index, and the close was also below the lows set on 6/8/2010, 5/25/2010 and 2/5/2010. The weakness demonstrated over the last week is significant. With a break below 1050, the market will try to run at 1050 as a resistance point. This could occur overnight in the Asian and European markets via the futures contract. Don’t be surprised if the market opens with some strength to it. Do not be sucked into that because it is just a test of the 1050 level. More than likely the market will chop around from 1040 to 1050. for a day or two. If the 1050 level holds as a resistance point then we should see a rapid move down as the second leg of this bear market. Happy Trading.

By John Pisanchik

The market ended the week by marking time Although the close was a little higher that Thursdays close, the high and low of the day was lower than Thursdays. The market still looks weak, but has also entered into the zone of support. So the market will probably chop around a little in this area before it does anything decisive. Happy Trading.

By John Pisanchik

The market continued it’s move lower after a brief pause yesterday at the 9 day moving average. The market will most  likely continue in this direction on Friday and could potentially test the 1050 level in the S&P 500 Cash index. Depending how you look at the technicals here, one can call this a third bottom or a fourth bottom. If you consider the low set on Feb 5, 2010, then you have a fourth bottom about to be set in the current market.

There are a couple of things that you must look at here. First, the market was in a weak position and on June 8 started a rally that took the price action above the highs set in the downswing prior to that date. That rally took the S&P 500 Cash Index above the 1100 level and and the weakness came back and that level could not be held on the downswing and fell back into the previous range. When we broke above 1100, I warned that this was probably a head fake. As things unfold, it was a head fake.

So what does that mean to the trader. Well the market will go lower, to test the 1050 level soon. Probably Friday as I stated above. If the 1050 level does not hold, then the next leg of the bear market will begin. Happy Trading.

By John Pisanchik

I generally don’t update this blog with my analysis 2 days in a row, but I felt that today’s market action was important enough to post my opinion. Today saw follow-through from yesterday’s reversal, and it plowed through the important 1100 level in the S&P 500 Cash Index to close at 1095.3 . This is weakness that should not be showing itself if the market was really about to go higher, so I am looking at the recent rally as a head-fake. What will validate this is a retest of the 1100 level, but from the bottom side. In other words, the market may show some strength tomorrow morning and start to press against the 1100 level from the lower levels seen today. If the market cannot get above and stay above the 1100 level tomorrow, there should be weakness coming in as the predominant force. So if we close below 1100 tomorrow, the direction for the market will be lower. Happy Trading.

By John Pisanchik

The market staged a great opening this morning, on momentum from Friday. It was stopped dead in it’s tracks just under the 9 day moving average, approx 1132 in the S&P 500 Cash Index. My Friday report warned that there is strong resistance in the 1130 to 1140 range. So today the rally was stopped and it is starting to look like a reversal day. Tomorrow will validate that or not. If it is a reversal day, the key will be how much of a move down will this go. It could retest the 1100 level, but that level must hold if the market is going to move higher. If that level does not hold, and closes below 1100, then weakness should be the dominant force, and we could see the market go lower. Happy Trading.