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Mike Paulenoff is a 25-year veteran technical strategist with experience at firms including Smith Barney, Harris Upham, and Drexel, Burnham, Lambert. He has been widely quoted and published in CBSMarketWatch, Barron's and Technical Analysis of Stocks & Commodities, among many publications.
He is currently author of MPTrader.com, a real-time diary of his trades and technical analysis of ETFs that track metals, energy commodities, equity indices, international stocks, and other markets. |
Near-Term Run, Long-term Fade
09/13/2005
Every day, I read the Wall Street Journal, and The New York Times, among
other newspapers and newsletters, but I consider the WSJ and the NYT to be
political bookends, the former representing relatively conservative,
Republican perspectives, while the latter representing liberal, Democratic
views.
It is instructive reading both in the morning, especially the editorial and
op-ed pages, to see how each views unfolding events, such as the war in
Iraq and more immediately, the fallout from Katrina.
If you have a chance to go back to Friday's editions, read the op-ed
article written by Paul Krugman (a Bush detractor, to put it mildly),
entitled "Point Those Fingers," and the article written by Thomas Friedman
(not always a Bush detractor), entitled "New Orleans and Baghdad." If their
views ever gain any real traction in the public domain, 2006-2007 will be
fraught with uncertainty on many fronts... and that will be dangerous for
the equity markets.
On a nearer-term basis (through the end of 2005), my technical work is
advising me that this past week's strength in general, and the pivot off of
Thursday's pullback low at 1229.51 in the S&P 500, could be the beginning
of an extremely powerful upmove that has much higher to climb in the
upcoming days and weeks.
The strength of the S&P 500 every day this past week (since last Tuesday
morning) and the speed and relentlessness in its recovery towards the
August high at 1245.86 suggests, when examining the four-year chart (see
below), that the index could be on the verge of a massive upside
acceleration off of a huge base formation.
The acceleration projects to 1300/10 and then to 1340/50. With Friday's
surge, the S&P 500 is positioned to test and hurdle the August high early
this coming week as it approaches its highest close since June 2001.
In addition, my daily and intraday work identify critical support at
1229.40, which if broken on any forthcoming weakness will invalidate the
powerful upside potential exhibited by the S&P chart. So, in a nutshell,
bulls need only risk down to 1229.40 to try to capture an initial target of
1300/10, and possibly 1340/50.
With Friday's strong action, and that of the past week in general, the
potential has greatly increased for a vertical upmove into the end of the
year.
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