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The Bulls Are Back...For Now |
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By Dave Floyd
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May 12, 2011
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The S&P 500 has shaken off the blues from the last few days and buyers are evident. However, when taken in context, this rally should be treated with caution.
Our near-term (multi-day) forecast still calls for lower levels in the S&P 500:
 Click on image to enlarge!
This pattern is playing out within what we identified last week as an ending diagonal pattern in the S&P 500 – near term we see prices moving towards 1300, and if our forecast is correct, when investors start getting disillusioned, 1300 will serve as solid support to push prices higher once again.
 Click on image to enlarge!
Implications for FX:
Using the S&P forecast as your back-drop, we would expect to see continued weakness in the likes of EUR/USD and AUD/USD while pairs like USD/CHF will push higher until the 1300 level is reached. If prices find support at 1300 as we expect, the opposite will begin playing out – rallies in EUR/USD and AUD/USD while USD/CHF is sold off.
For more from Dave, visit Aspen Trading for more updates. |
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