Market Rotation

SPX between strong resistance levels around 1250 and the strong support levels around 1165 (see recent "SPX Long-Term Support & Resistance Levels" section). It seems, SPX has hit a short term low in 1168, and will trade in a volatile range in the coming weeks. Also, it seems, the rotation of bonds and stocks held in non-oil resources, for the fourth quarter, as many non-oil stocks relative or fundamentally undervalued. Also slowing growth in the housing market may cause a shift of investments in the stock market.

The first chart is a daily chart NYSE Oscillator, since mid-2002. SPX and Oscillator generally move together. Each time the oscillators 20-day MA (blue line) has dropped to around 50 negative, both the oscillator and SPX rose (also shown in older charts). Currently, the 20 day MA is negative 37, after a four-month downtrend. SPX a 10% correction to below 1,125, possible. However, the Oscillator suggests it is more likely SPX will trade in a range, perhaps for several weeks, and then rally.

The second graph is an SPX daily year-to-date overview. Short term resistance around 1192 (an old-level) and 1200 (200 day MA, which is flattening for the first time since the cyclical bull market began in October 2002 and March 2003). Short-term support is around 1180 (last week's low, in the middle of an hour Bollinger Band and lower range of previous consolidation area, between 1180 and 1190). SPX often closes the week in the middle of a perceived short-term trading range. SPX closed at 1186 (which fits well with my 1170 to 1200 range declared more than a week ago). However, perhaps, SPX will not pull back under the high 1170 and early next week to rise higher, perhaps to 1192 sometime next week.

Most of the third-quarter earnings, and the fourth quarter guidance, will take place in the next two weeks. Also next week's options expiration week, which is typically a volatile week. Moreover, economic reports, along with oil prices, the market will continue to move. Consequently, there are excellent opportunities for trade, especially next week, to make huge profits. Quickly There are also many longer term buys undervalued (see sections wage for details).

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Arthur Albert Eckart is the founder and owner of Peak Trader. Arthur has worked for commercial banks, eg Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds 1999-00. Arthur Eckart has a BA and MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has to maximize a comprehensive trading methodology using economics, portfolio optimization, and technical analysis and minimize risks at the same time and developed over time. This methodology has resulted in excellent returns with low risk over the past four years.