Sunday, April 8, 2012

SPX Is About To Test Its 50 D-SMA

SGS is NEUTRAL (As of close of 3/6/2012)
In CASH (closed all positions @ SPX 1254 on 12/22/2011)

SPX Futures are down around 1% suggesting an open tomorrow solidly below critical support at 1387.  It's highly likely that SPX tests its 50 D-SMA and its Primary Up Trend Line (orange) at or around 1370 sometime this week.

If this is the beginning of a substantial correction, we should see Big Money unloading long positions. I will be watching recent large caps high fliers, AAPL, GOOG, PLCN, etc. If they significantly under perform the indices with relatively higher volumes tomorrow, correction would continue well beyond 50 D-SAM. If they outperform or stay at par with indices, then SPX 1371 would be a good entry for going long.  

My guess is that SPX quickly goes to 50 D-SMA with no liquidation by Big Money and rallies back up again to set new highs on the back of good earnings.  My plan is to do my first buy right around 50 D-SMA sometime this week at SPX 1371.  I will post my detailed plan later.

Employment numbers released on Friday were very disappointing, but one thing is for sure: continued weak employment data would surely mean QE-III.   Furthermore, weak employment data means no labor cost pressure for businesses and hence higher profit margin for their products.  Bad employment data is always welcomed secretly by Big Money and Big Business.

Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.