Just Technicalities, As Markets Await The Dose Of Dopamine From FOMC

It does not matter what is the level or value, just direction matters. Markets appear in mood to pick the dose of dopamine, what makes them happy. And no wonder, as the traditional X-mas rally, that started already in March this year, should have legs ...

Those who are seeking long term value, probably should think of wise words by Gerald Loeb:

Profits can be made safely only when the opportunity is available and not just because they happen to be desired or needed. ...Willingness and ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival.

Leading indicators in the land of positive hard data surprises recently, somehow are taking the breather for the X-mas, but the area of negative hard data surprises somehow blows strong into 1st quarter of next year.

At the end of day, somebody is trying to push up the unpopular banking laggards ...

Only technical interpretation of charts may confuse the quant algorithms. Societe Generale takes the bull's suggestion for the S&P500 equity index with the "... close to breakout" title for the technical analysis section in its weekly "Equity Prism" today.

The pause that began end-October (in the form of a complex flat consolidation pattern) should now give way to a gradual improvement, leading to new annual peaks.

Click on chart to enlarge, courtesy of Societe Generale.

The first weekly close above 1,100 would be a positive signal, to be confirmed this time by daily closings above 1,111. As a reminder, the real signal of a breakout is still present, and would be confirmed by a move above 1,120/1,125 (closing) This key level (retracement of 50% of the downtrend over 2007-2009) has kept the index in check since mid-October. The anticipated breach of this level would bring confirm of a continuation of the uptrending wave that took shape in March 2009, with the next target at 1,200/1,225 (62% retracement and initial target - arithmetic - of the inverted head-and-shoulders reversal formation).

First resistance level at +/-1,150.
Support 1,085/1,080 -1,060/1,055.
Resistances 1,120- 1,150 - 1,200/1,225

The Japanese candlestick masters at Nomura take the other side of trade for whatever reason. Click on chart to enlarge, courtesy of Nomura.

FOMC has the chance to release the final dose of dopamine for the bulls tonight, or over-dose...