Tech Musings

The first chart I have presented is 240 mints chart of S&P500. From this chart we can see S&P500 failed to break above the channel resistance thrice and the weekly close was below the trend line. The uptrend which started in first week of June now seems to be broken. The most likely retracement form here should be towards 1360 levels.  

S&P500 240 minutes chart

However if we look at the monthly candle stick pattern, the probability that that S&P500 will make a grave stone doji pattern is very high. With this in context I think the next week of trading will be choppy with market closing around the 1420 – 1430. Correction may start from next month.

 

S&P500 Monthly chart

However if index falls below 1360 then it will break the trend it was in since march 2009. S&P500 had already broken the trend line more than once during the last four years but each time it pulls back above the trend line.  We need to see whether this time the breakdown is conclusive or just a whipsaw.

S&P500 Weekly chart

Technology shares have been very weak after recent earning announcement by Intel and Google.  NASDAQ 100 had almost fallen 3% more than other index. Nasdaq 100 is already challenging the long term trend line. If markets corrects further from here technology stocks will be hardest hit and Nasdaq will be the first index to break below the uptrend. 

Nasdaq 100  Weekly chart

Dow Industrial has already broken below the trend which started in May 2012

Apple which has 15% weight in Nasdaq 100 and almost 4.5% in S&P500 has turned significantly bearish. It seems that Apple may correct up to 450 – 500 levels dragging index with it. 

Apple Monthly chart as on 9th October 2012

Similarly Amazon also failed to break above the resistance line and seems ripe for significant correction in time to come.

Amazon Monthly chart

I have misread my previous chart on Euro where I felt that Euro would break above 1.40 levels. Euro is sliding in this channel and facing considerably resistance at the upper end of the channel.  Further gains in Euro are possible only if Euro breaks above 1.32 levels, otherwise it is entirely possible that Euro may turn back from here. 

Euro Weekly chart

Summary-

1. Markets seem to be near a turning point. It may happen that the uptrend which started in March 2009 may end by December. Gains from here should be limited in nature and therefore strict stop loss is warranted for long positions.
2. If S&P500 breaks below 1420 target will be 1360 -1380 and if market breaks below 1340 -1360 levels we can see 1100  to 1200 levels.
3. Long positions with strict stop loss can be taken only when S&P500 breaks above 1480 levels on weekly closing basis (but with strict stop loss)
4. Technology sector seems to be week. Technology sector had highest growth rate, but during current earning season it had reported negative growth of 10% in EPS.
5. Apple, Amazon and other high flying tech stocks can be in for a big correction.
6. Euro may face significant resistance at current level and further up move will happen only if it closes above 1.32 levels on weekly closing basis.