Technicals | May 26 2010
By Chris Shaw
According to Antipodean Capital there is now a clearer technical picture for US stocks, as recent price action has largely followed its expectations.
Overnight the Dow Jones Industrial Average opened weak but right on support near 9,800, while the S&P 500 did the same with support at 1,040. Antipodean had expected stocks would base at those levels and then rally, which is just what happened on the market last night.
More importantly, Antipodean notes price action on the Dow Jones formed a bullish hammer pattern, which implies the fall from 10,900 on the Index is almost over.
This suggests a rally to modest corrective targets of 10,400 on the Dow and 1,120 on the S&P, while Antipodean suggests a more substantial rally of one to two weeks is also possible. This would bring markets back to the 1,150-1,175 range on the S&P and the 10,700-10,900 range on the Dow.
That's the good news. Unfortunately Antipodean's Elliot Wave analysis suggests such a short-term rally would be just that, before peaking at a lower high and riding a fifth wave down to new 2010 lows.
