Alexandros Yfantis | Sep 16, 2013 07:20AM ET
Following the withdrawal of the candidature for FED chairman by Summers, S&P futures gapped up early today nearly 20 points reaching the previous all time highs. Our view up to now was bearish with a strategy to enter short positions when support levels are broken. Moreover, we also note in previous posts that prices were to reach 1680-90 if 1665-70 was broken upwards. So are bulls really in control or is this gap up in pre-market trading just a bear squeeze? According to our Elliott wave analysis and according to theory, if prices move past the starting point of a wave pattern, then the previous move cannot be labeled as impulsive. In our case, if prices (cash) make a new all time high, then we cannot label the decline from 1709 to 1627 as impulsive. It is therefore important to wait and see if the cash market makes a new all time high. Trend remains up and a new all time high does not cancel the increased possibility of a trend reversal. This does not mean that it is prudent to go short if new all time highs are made.
Current market price action has given bulls the upper hand. Prices will be targeting a new all time high today and after the pull back we expect, if prices do not break support at 1680, we should be expecting another leg up at least towards 1720-40. Needless to say that if 1680 support fails, then bulls will have to guard the very important support at 1630-40.
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