Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

The S&P Goes - So Goes SPXU and UPRO

Stock-Markets / Stock Markets 2011 Oct 24, 2011 - 12:00 PM GMT

By: George_Maniere


Best Financial Markets Analysis ArticleAbove my desk I have a big sign that says “the market will always do what the market has always done, misdirect, confuse and confound.” The way the S&P has been behaving since August is proof perfect that this slogan is as true as ever.

For those of you not conversant with the Ultra Pro Shares ETFs Pro Shares Ultra Pro S&P 500 (UPRO) is a triple leveraged fund that seeks a 300% return on the performance of the S&P for a single day. Conversely, The Pro Shares Ultra Pro Short S&P 500 (SPXU) seeks a triple leverage or 300% return on the inverse performance of the S&P 500.

For those of you that read me on a regular basis you know that I was certain back in August that the S&P would break the support line of 1100 and from there would go to 1050 / 1020 and if things got very tight it would go to 960. On October 3rd I was sure that I would be right as I watched the S&P break the 1100 support and hit an intraday low of 1078 before closing at 1100. One or two more days of trading below 1100 would confirm my thesis and I would add to my already overweight position of SPXU. Well I was wrong. Two days at 1100 on the S&P and it began its march up and I was forced to sell at about 1140 and admit that I had been fooled again. Let’s take a look at the chart below.

As this chart will show the S&P kept its march up and about two weeks ago it formed a consolidation area between 1200 and 1220. There it remained for several weeks. The S&P attempted to continue to consolidate last week as it traded sideways in the $1200-$1220 range. On Friday the S&P 500 closed the week out at the highest prices it has seen since the decline that began in August. Buyers, however, remained impatient and only allowed a week or two of rest. This is a good show of strength as the S&P could have easily experienced a deeper pullback and still remained healthy. While I believe the S&P will need to take a more extended breather, (especially with the uncertainty from Europe) it may make a run towards $1260-$1270. This is a key level to watch in the near term as it marks a prior support level from June and the approximate area of the 200-day moving average. If it breaks through the 200 DMA we will rally to the end of the year. While S&P still has plenty of overhead resistance, the rally from its recent lows has been staggering.

In conclusion, I think that Fridays rally to 1138 was less of a rally and more of a short covering. I expect to see a pullback to the 1220 level today but there are other factors involved.

According to the Wall Street Journal, European leaders are nearing agreement on a plan that would see the region's banks raise around €100 billion ($139 billion) in fresh capital, said three people familiar with marathon talks taking place here on Sunday.

I must interject that the great Jesse Livermore taught us that it is not the news that means anything it is how the market reacts to the news that is important.

The bank-recapitalization plan is the easiest piece of a three-pronged bargain that the 17 euro-zone nations are hoping to reach during meetings that began Sunday and will continue through at least Wednesday. There remain disagreements on the other two measures—steps to boost the firepower of the bloc's €440 billion bailout fund and, critically, to deal with Greece's spiraling public debt through a complex restructuring.

German Chancellor Angela Merkel, left, walks with IMF Managing Director Christine Lagarde, center, and ECB President Jean-Claude Trichet during a roundtable meeting of euro-zone members at an EU summit in Brussels on Sunday.

European Union finance ministers discussed the bank plan during a 10-hour session on Saturday. Swedish Finance Minister Anders Borg said on his way out of the meeting they had agreed to the foundations of a plan. Today will be a very interesting day.

By George Maniere

In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent. Please post all comments and questions. Please feel free to email me at I will respond.

© 2011 Copyright George Maniere - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules