S&P Composite:1444 - Expected to rise to 1515/1560 over the coming months

The overall chart structure is bullish. Near term, a challenge of resistance at 1461 from the recent peak seems likely. This area is not expected to impede progress for long and it currently seems likely that the market will rise to challenge major resistance at 1515/1560 over the coming months.

The medium / longer term trend is clearly bullish right now and the late February / early March retreat appears to have been no more than a healthy correction within this trend. Trading action since the March low has been constructive and a new short term uptrend appears to be emerging. Having just cleared last month’s minor high, the S&P now looks set to extend its recovery up to challenge relatively minor resistance from this year’s peak at 1461.

An appraisal of cyclical factors leads me to believe that the late Feb / March correction coincided with a medium term cycle low and that a new medium term bullish cyclical phase has just begun. Increasingly, it seems likely that this will help underpin a challenge of major resistance from the all time highs at 1515/1560 over the next few months. Readings from momentum indicators, coupled with the healthy overall medium term chart structure lead me to believe that resistance from this year’s high at 1461 will not prove to be a serious impediment to progress and that we will see this area cleared before the month is out. A closing break above 1461 would reassert the prevailing medium / longer term uptrend and indicate that further progress is imminent.

As mentioned above, the overall chart structure currently looks strong enough to support a challenge of the all time highs over the next few months. However, it is worth bearing in mind that as a market approaches a major resistance area such as this, it is difficult to be precise when it comes to determining lesser resistance areas – i.e. the points on the chart from which temporary corrections occur.

Initial minor support stands at 1438/1434. A close beneath here would suggest vulnerability to a drop back to 1426/1420. However, it would require a closing break beneath the latter area to warn that the near term uptrend is losing momentum. Beneath 1420, more substantial support exists in the range 1411/1408. The chart structure would deteriorate markedly on a closing break beneath 1408.

Support: 1438/1434(minor), 1426/1420(minor), 1411/1408(fairly minor) 1384/1383(minor), 1374/1373.

Resistance: 1461(fairly minor), 1507/1509(possible), 1515/1560(major).

FTSE100: 6397 - Short term bullish, medium / longer term neutral

Near term, the prevailing uptrend looks set to resume and a challenge of major resistance from the all time highs at 6760/7050 seems quite feasible over the coming weeks. However, bulls should proceed with extreme caution as the market draws close to 6760/7050.

If I were to disregard market action prior to 2003, I would definitely be advocating an outright bullish medium / longer term stance right now. FTSE’s four year old bull trend shows no obvious signs of faltering - Recent gyrations have merely served to unwind overbought constraints and to steady a trend that had become somewhat overextended on a short term basis. In addition, we have recently seen a sharp rebound from the lower boundary of the market’s well-defined four year bull channel. Moreover, an appraisal of cyclical factors suggests that last month’s correction coincided with a near / medium term cyclical low and that cyclical influences are likely to be bullish over the next few weeks.

However, there is one big caveat to all this, namely that FTSE is now drawing close to major resistance from its all time highs. Time honoured technical wisdom dictates that any market approaching all time highs highs should be viewed with a strong measure of caution. As such, I’m inclined to tone down what would otherwise be an aggressively bullish outlook, to one of cautious optimism for the nearer term.

Overhead, relatively minor resistance potential stands at 6481/6532. On balance I believe that the market is quite well positioned to punch through this area. A close above 6532 would tend to reinforce near term bullish technicals and should prompt near term strength to 6650/6665 at least, and thereafter in all likelihood up to the all important major resistance zone at 6760/7050. My outlook would become increasingly cautious as the market draws close to the major resistance area however.

In order to clear the way for serious long term strength, a decisive closing break above 7050 would be needed.

What would indicate that the four year bull trend has failed?

Beneath current levels, minor support areas stand at 6349 and 6276/6250. A closing break beneath the latter area would render the market vulnerable to a retreat back to big support in the range 6044/5985. Another test of this area would give a first tentative warning that the bull trend is faltering. However, it would require a close beneath 5985 to break the uptrend and signal a move into clearly bearish territory.

Support: 6349(minor), 6276/6250(minor), 6044/5985.

Resistance: 6481/6532(Fairly minor), 6760/7012(major).

Chinese Market Still Looks Strong

Shanghai Composite: 3323

Long Term Outlook Bullish, Short term Outlook: bullish

I can’t fail to be in awe of the longer term chart structure of the Chinese market. The trend is about as solid as a trend can get in an immature market such as this. Yes, it has gone up a long way, but the Jan – Feb consolidation spell has served to unwind medium /longer term overbought constraints to the extent that they are no longer an issue.

Last month’s push into new high ground has reasserted the trend decisively. Over the next couple of months I’m anticipating gains of around 6% from current levels – i.e. an advance up to resistance potential 3470/3535. On a more extended time horizon, I believe we will see further substantial gains up to 3850/3880 at least, if not 4065/4068. More immediately the market is expected to extend its advance up to what appears to be the nearest sizeable area of resistance potential centred on 3470/3535.

Initial minor support currently stands at 3148/3141, with more substantial support in the region: 3045/2980. A pullback to the latter area would likely represent an excellent buying opportunity.

What would weaken the outlook? Althouth a close beneath support in the region 3148/3141 would render the market vulnerable to continued short term weakness (initially to 2855/2852), this would not detract from the bullish longer term chart structure. In order to give a first clear warning sign that the longer term trend is faltering a closing break beneath 2732 would be needed.

Support: 3042/2961(fairly minor), 2855/2852(minor), 2749/2730(fairly minor), 2540 (Intermediate).

Resistance: 3470/3535(fairly minor), 3850/3880, 4065/4068.

Yahoo! Chart