When I wrote my last post on 27th
Jan 2014 S&P500 was trading at 1790 levels and it fell to 1740, but to my
surprised market recouped the losses and move up to make new marginal new highs
which was completely unexpected.
If we look at the given chart of
S&P500 we can see that the index have done exactly done 38.2% extension of
the entire fall of 2008 – 2009. Also 1900 is a psychological resistance level.
Moreover markets also looks exhausted and haven’t moved anywhere in last three
months.
If we look at the second chart we
can see that markets have been trading at the resistance of the channel line
for quite sometime now are ready to correct towards the lower end of the
channel.
In the third chart I have marked the probable
path of S&P500 with a red line. I am expecting that the markets will fall
to 1600 levels to retest the trend line before they finally move up towards
2100 levels
Summary:-
1. S&P
500 looks ripe for a 15% correction.
2. Maximum
upside form here is limited to 1900 – 1950 levels
3. Markets
may fall to 1600 levels from here.
4. The
probability of that happening is more than 90%
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