Good News!!! The Major Banks Need more Cash!! Lets Rally!!!

Yesterday:

 

The S&P hit my resistance target of 920 and did not break that range. Prices did not go through a corrective move for any retest. Since the trend is clearly defined as up, we are getting some follow-through and a break of the upper trendline on the wedge pattern.

 

Today:

 

Prices should continue their advance, and we may see a test of the 930-931 range. It appears that the market is shrugging off the fact that banks need to obtain additional cash. This optimistic viewpoint is based on the need to believe and because many investors have made major commitments and have  losses that they need to average out. This move could easily get some legs and advanced into the 1020 range, but it does appear that we will see a corrective move prior to that move and may occur at 941 or 950 range. I believe if this rally extends past this week, we will see the up trend lasts until June 1^st or 2^nd.

 

If this is a hope rally it occurs out of sheer necessity where people invest in hopes to see new highs again, and the prior move to still be intact. Eventually, the move dissipates as a culmination of bad news or mediocre performance occurs. There is no way under this current market conditions (created by business and government intervention) that this market can sustain the earnings or the price movement that we have seen in the past which occurred under perfect businesslike conditions.

 

I see a possible change occur on May 9 or May 11 near the price ranges of 931 or 941. My take on this move is that it may be a blow off followed by their corrective move to occur. Prices are becoming overextended on the short-term, but they must be allowed to take place. After the corrective move, as long as there is no violations of some prior major lows we could see another advance to complete by June 1.

 

Support / Resistance:

940-942 2^nd resistance

930-931 1^st resistance

918-920 1^st support

907-909 2^nd support

 

Notes:

 

Traders must be mindful that the trend is up currently. In that this is a bounce off a major retracement after very long decline. So takes time to allow the money managers and investors to bargain hunt and protect positions.

 

Gannfann