Unemployment rate, unexpectedly dropped from 9.5% to 9.4%, gave stocks reason to rally. The SP 500 index closed this week at 1010, up 2.3%, the Dow Jones Industrial Average increased 2.2% for the week, and the Nasdaq composite index gained 1.1%. The S&P 500 index has climbed above the 1000 psychological barrier. Every time the index break through a resistance level, it will spent sometime in that level for consolidation. If the resistance which becomes the support is successfully tested, the index will resume its trend and heading to the next level. With the economy recovery at hand, I expect that the 1000 level will be successfully tested and the index will head to the 1200 level.
The chart below is the monthly chart of the S&P 500 index since year 2000. The top part of the chart shows the price movement of the index and the lower part shows the Stochastics indicator. Multi-year rallies occur when the Stochastics indicator climbs above 50. It is a good sign that the Stochastics indicator, currently stands at 40, has climbed out of the oversold level since March and is still treding up.
1 comment:
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