Amazon.com Inc. (AMZN) scenario and chart analysis

Amazon.com is forming an expanding triangle, which can either be a top or continuation pattern, but that's for long term direction of this stock, in the short term, AMZN is right at the upper trend line, the likely path is down to 95-100 level at around mid-December or early January 2011.

S&P 500 scenario for Q4 of 2010

With 50 DMA below 200 DMA, VIX at the tip of breaking out from 4 month falling wedge, and S&P 500 about to be rejected by upper end of trading range, here is one of the scenarios in my mind for the last quarter of 2010:

For bulls, bad news is S&P 500's 1220 level hit in late April is very likely the high of 2010, but the good news is that we are likely to see that level to be broken to the upside sometime in 2011.

Monthly Intraday Charts for SPY and SSEC

This is a monthly series of intra-day charts for S&P 500 Spider ETF (SPY) and Shanghai

SPY

SSEC

VIX and VXN chart update

Today CBOE S&P 500 Volatility Index (VIX) gave us a small but significant breakout of its 4 month falling wedge formation (A).  Last time in early August, a smaller falling wedge formation was broken out to the upside (B), and the subsequent rise turned out to be continuation of a larger 4 month falling wedge formation.  This confirms the bearish outlook of US equity markets in the short and intermediate term.

Similiarly, Nasdaq Volatility Index (VXN) is at the tip of its falling wedge formation, it's not yet broken out reflecting that relatively smaller fear investors have regarding Tech sector, and indicating Tech remains a strong sector in overall economy.

US Dollar intermediate forecast

It seems US Dollar will drop in the next month or so and will find support at around 76 area.

For long term US dollar analysis, see here

Baltic Dry and Crude Oil chart follow-ups

Almost exactly as I pointed out in previous post 3 weeks ago, BDI met resistance at 50% retracement level from mid-May high and early July low and is now heading down again.  BDI has been a reliable leading indicator for US equity markets, so this is a negative signal to bullish investors

It turned out one of the fibonacci lines I drew 3 weeks ago turned out to be resistance, Crude Oil first touched its 61.8% retracement between early August high and late August low, now it's heading down.

This happens at the same time when the AAII bullish sentiment reached 3 year highest level, and S&P 500 index stuck at the 1130 resistance level.  So the outlook of US stock market does not look pretty, and this echoes the poor economic data stream lately.

On the positive side, Bond has been in confirmed down trend, while EURO/JPY has been in up trend, as long as these trends continue, the outlook of US equity markets is promising. 

With all the above said, the outlook of US equity market is uncertain, with a slight higher downside risk in the near term and very high downside risk in the intermediate term.

S&P 500 chart analysis and scenarios

S&P 500 one year chart

As expected, S&P 500 surprised most of crowd by breaking the downward trend line to the upside today.  The question is how long and how high will this rally go?  A couple of scenarios:
1. The bull scenario or the green line, after testing the upper side of the trading range, the index breaks to the upside and retest April top
2. The bear scenario or the red line, after failing at the upper side of the trading range, the index breaks down to complete the giant almost 12 month head and shoulder top.
3. The more bearish scenario.  This scenario is not painted here, but under this scenario, the index touches 1000 and turns back down.

So which scenario will be true, the answer will be revealed soon, and the key is whether you can recognize the hint of the answer not very much but just a little sooner than the other people, that's what I think is the key to success of investing.