S&P 500 Technical Analysis
On 27th July 2011 the S&P 500 was at exactly the same level as where it is right now, 1,310.00. Since then it the Index has gone through stormy waters. On 4th October last year it, in fact, briefly touched 1,074.00, more than 21% lower than the 2nd May high of 1,365.40.
In Fig 1.30(a) we see that the first time it was able to break out of the Ichimoku cloud after that was during the middle of October 2011.
On 10th January 2012, the S&P broke through the psychologically important 1,293.30 level, which was the previous maximum it reached on 27th October 2011. Since then it has been rising steadily, although recently we have seen somewhat of a correction.
Right now the price is well above the Ichimoku cloud. The green Chinkou Span line is positioned above the price of 26 periods ago and both the red Tenkan Sen and the blue Kijun Sen are above the Ichimoku cloud. All of this confirms that we are experiencing something of a bull run.
If the price should continue to rise, a short term long trade could be profitable. Wait for the price to return above the level of 1,333.50 it touched on 26th January.
If it should continue to rise after that, the next important level to watch out for is 1,365.40. Any close above that will be a very strong signal that the bull run is back in full force.
Short trades are currently only advisable for day traders cashing in on intraday price movements.