U.S. DOW; S&P500; WEEKLY OUTLOOK: 11MAY TO 15MAY 2009

DOW(8575)

This index followed almost our premarket script of Friday and closed near the desired mark.It is a positive development. Volume also was not below average though the RSI looks somewhat reluctant to enter into the overbought zone. Only hitch is that markets have normally moved contrary to the overwhelming consensus, but this time it would be too depressing if this index does not manage to atleast rise up to its 200dma around 9000 levels.  All its peers around the globe including FTSE100 have had the honor of reaching upto their 200dma by now. So, we very much hope that it would not disappoint. Stay with the trend and the trend is up, so far!

Resistance at 8676 needs to be overcome to move upto 9000.  Then next resistance area would be 9100 to 9200. If the present momentum continues then it could be headed towards 9500 in the days ahead.

Supports would be at 8500 and then at 8400. Immediate term traders may desist from initiating fresh longs on a close below the first support.  Risk appetite traders can buy with stop at 8400. Short term existing long positions may exit on a close below 8340.  But medium tem would remain positive until the index gives a close below 7780.  In other words, the index can take a rebound from any level above here in the event of a correction.  

*******

S&P500(929.23)

This index has been lending moral support to the U.S. markets by displaying much better picture over the last few months. But it has also yet to overcome its 200dma at 950 area. Volatility Index VIX has also been supportive and the confidence of bulls also is reflected in PCR(Put Call Ratio) which is around 0.8. It implies that there are more Calls in the system in anticipation of higher highs. At the same time it is also a negative that there would be lesser cushion in the event of any decline. The week ahead is also the Options expiry week.  So, it is a mixed bag of positives and negatives for the week ahead.  Still the momentum is in favour of the bulls. It would do to stay with the trend.

Resistances are at 943, 952 and 966.  A firm close above 952 would be a signal that this index could head toward its medium target 1040.

Supports are at 919.2, 915.8 and 912.4. Avoid fresh longs on a close below the first support.  Risk appetite traders can look for opportunity if takes a bounce from the second support.  Short term  trend turns sour below the third support.  However, the Medium term trend stay positive as long as this index holds above 830.

Disclaimer: This is not an invitation to trade in the markets. Use your own discretion as trading in the markets also can cause financial loss to you. The usual disclaimer applies as mentioned directly indirectly on this blog intermitently.