S&P 500 Tests Key Support Once Again, Says Dr. Joe Duarte
Duarte added: A whole lot can happen in the next 24-48 hours. But if things remain the same, the S&P 500 will likely be on its way to a test of the 750 area by then.
To be sure, Monday's fall in the market could reverse. It has happened before, especially in this latest rally that started two weeks ago. Yet, things look a little top heavy, even though the S&P 500 has support near the 780-800 area, which corresponds to the 78-80 area for SPY.
Why this break now? Well no one ever knows precisely why markets do what they do. But certainly external factors are important. And the political shifts that are ongoing around the world are increasingly influential, especially the increasingly testy action taking place between G-20 leaders, as well as economic data all over the world that continues to point toward more weakness ahead. Add to these factors the recent rally in which the markets added a nifty 20 plus percent in a few weeks, and you get the perfect excuse for some profit taking.
What's important, from an investment standpoint, is to be on the right side of the equation, which means paying attention to sell stops, as well as protecting profits and considering selling the market short if you are an experienced trader.
Duarte's conclusion: In a market such as this, there is no substitute for having and executing a trading plan, devoid of emotion, with the major goal being the preservation of capital.
Make sense of today's nonsense. Get Doctor Joe Duarte's Market I.Q., at:
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Duarte partners with the Investors Resource Center at Investrend Information (http://www.investrendinformation.com).
Duarte's IntelligentForecasts.com (http://www.intelligentforecasts.com) provides free news coverage and analysis, and his daily articles and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Duarte has combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.
He is the author of: Futures And Options For Dummies, Successful Energy Sector Investing, Successful Biotech Investing and co-author of After-Hours Trading Made Easy. In early 2001, in Successful Energy Sector Investing, he correctly predicted that Venezuela's political problems could lead to an energy crisis in the United States. He has also appeared as a weekly guest on Market Mavens Radio and has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.
One of CNBC's original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990. His articles and commentary have been featured on CBS Marketwatch, Barron's, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines. In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.
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