Source: VantagePoint Intermarket Analysis Software

From the low at 665.75 on March 6, S&P 500 Index e-mini futures rallied to a high of 821.00 on Monday, a gain of more than 23% in 11 market days – more than the market normally makes in a year and clearly a hot market by any standard. But is this rally the beginning of a new bull market or just another “dead cat bounce” often seen in bear market declines?

  • Fundamentally, the market seems to like the Fed announcement about buying Treasury securities and the Obama Administration plan to get toxic assets out of bank holdings. But is the euphoria from those events about played out?
  • From a traditional analysis viewpoint, the big gain Monday pushed the S&P e-mini above psychological resistance at 800, and a big white, bullish candle suggests strength.
  • But has the market become overbought by going up too fast to sustain a lasting uptrend?
  • VantagePoint traders who rely on predicted medium-term moving average crossovers caught the start of the downtrend (1) and the uptrend (2) to produce big profits.
  • VantagePoint indicators like the neural index (gray line now at 1.00) and predicted moving average (blue line) still show bullish signs, but the predicted medium-term difference (blue line at bottom) has turned down and dropped below the predicted long-term difference (green line), the first hint that upward momentum may be diminishing.
  • VantagePoint traders trying to catch a downturn after seeing this alert might bring VantagePoint’s predicted next day’s high and low (not shown) into play – in this case placing a sell stop below Tuesday’s predicted low at 390. If the market drops below that level, they are short; if the market continues higher, they have lost nothing and can adjust their sell stop in line with the predicted next day’s lows.

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