S&P in a world of trouble?

I hope to make this brief but there is a lot to say on the markets.  The Bulls were banking on Q2 earning to boost the market, however there has been a mixed bag of earning lately and thus has been quite bearish.  In addition to this, the debt crisis has not gone anywhere.  You can't have a healthily stock market when banks can't lend money to business and cities, states, countries are facing potential default (i know these can't technically default since they are not considered corporations but they will still require rescuing).

So S&P and every other major market took a dive on Friday.  Before I look at the current picture lets go back 2 years on a daily, to see where we are currently.

 
First I would like to make a note of the Fib retractment I have setup.  The retracement is projected from the recent high to the current low that happened a couple weeks back.  Look how perfectly the fib retractment fits this graph.  With the 161.8%  and 261.8% level matching up with strong resistance and support lines.
Also note where the S&P is, if it breaks that 100% retracement without finding sufficient support, it is not far fetched to say that the S&P is heading down to the 875 level (161.8 retracement) if not to the 675 level.

just looking at this graph it is hard to be a bull in this market place. As it is pretty clear that we are rolling over, and have made lower highs and lower lows over the past 2 months.

The next chart is a daily on a recent history with some indicators on it.

Lets note that the market is still over bought with the Slow Stoch at 84.25.  Look what happened last time it was in this situation, a strong downtrend.

Most interesting is that the volume is higher than any bull day in the previous uptrend.

The trading channel is quite defined in light blue, if that channel gets broken to the downside along with the 100% retracement level, this market will be in really bad shape.

The most bearish part of this chart is that the sell off closed below the last MA support level the 20 day.  Which virtually guarantees that a test of that 100% retracement will occur.  This also provides an amazing tight stop-loss location at 1075 ish, if the index closes above this that would be good news for the bulls.

Playing this index you could use HIU (horizon beta pro, S&P 500 inverse ETF). Friday's price action resulted in a bullish engulfing candle stick pattern. The close of this ETF is at $10 flat, and ended at the 20 day MA and the 38.2% retractment on the recent highs and lows. This again provides an excellent stop loss support level.  I will continue to update the progress of this market.

Ford! Tech analysis

I have some vested interest in Ford so I thought I would put my thoughts down.

This is an interest chart, since before the 2008 crash, Ford was only at 9 bucks, and it is currently being traded at $11 +.  The recent highs have coincided with the 2005 highs.  So this stock recovered very fast after 2008 and broke to new highs.  One reason is that it was the only American Car manufacturer that didn't require help from the government and that the Cash for Clunkers program was used to stimulate car demand after the crash.  The Cash for Clunkers program has now been terminated. 

Ford also is part of the S&P 500, I will be doing a chart for that index next since i think there is some nice trades to be made.

Chart1: is the weekly to show the much inflated price of the current stock, The fact that it is above its 2008 highs is strange.

Chart 2: daily

Hmmm....
Lets take note of the violent bounce off the 50 day MV on Friday, this bounce pushed the stock lower to close below the 38.2% retracement, generally that means that a test of that 0 level is likely.  However, there is the 20 and 200 day MV that may offer some support at the 23.6% retracement.  If the stock breaks this level, look for it to go much much lower.

Trend Lines
At the 23.6% level there is light blue line I drew, this is the trend line connecting highs, as you can see we GAPPED up over that line 4 trading days back, and it appears that the market is looking to fill that gap.  The purple line may also offer some support to this market and it dates pretty far back.  The last level of support would be the lower range (light blue line), IF the stock breaks that level, the stock may be in a world of trouble since it has a far way to drop compared since it is near its 5 year high. 

Bollinger bands:

They will offer some support also at the 9.90 to 10.10 level depending on where they move.  However if we have people throwing in the towel bollinger bands may not be able to provide anything but consolidation bounces along the way down.

MACD - not visable.

The macd is leveling out and the histogram should have had a lower tick Friday than the thursday indicating a roll over.

Slow Stoch
Guess what?  yup overbought still, so shorting only makes sense, you never want to buy into a market that is overbought.  Look what happened to the over bought condition on April 26th?  A huge tumble.

Volume

The volume for the day was not overly high, it was on the same level as the previous bull days.  However, I included it because of the history of volume.  Look at April and May.  Almost all volume that is above average is BEAR volume, they have not yet stepped into this market, so if you see a large increase in bear volume, expect steep declines in this stock.

How to play this stock?  At this point I would get into it basically anywhere, if you wanted to you could hold off and wait until some of that strong support is broken, such as the 20 and 200 day moving averages, and the 23.6% retractement with stop losses just above key resistance areas.