Outlook July 26

While downward pressure on stocks was evident in the beginning of the week, we didn’t  get real follow up on the previous Friday’s drop, and the market recovered nicely towards the end of the week.

This means that for the first time since last April we are seeing signs of strength in the market. Of course there are a few more days to go in this Red Period, but the odds are shifting towards a rally that will last into August. It will become more clear this week.

Today I want to show you a chart of the S&P 500 Index (click for larger image).

Since last year the price action has been confined between a few support/resistance lines. Notice how the blue lines connect nearly all major tops and bottoms over the last 12 months.

These lines converge at two points: in mid September and mid November.
It will be interesting to see what happens going into these dates.
Currently I would look for some top in August followed by new downside action.

Based on this chart and the LunaticTrader cycles I will be watching out for the days around 20th September,  15 November and 30th November.

Good Luck, Danny