S&P 500 Technical Analysis, September 3, 2012

Daily Chart

The S&P meandered for most of the week establishing the 1400 level as support with 1425 as resistance.

The MACD is clearly negative but the RSI is close to 50.

For the week ahead, we may see a rally as the market attempts to front run ideas from the ECB and Federal Reserve. 

We are still in the upward trendline which is positive and the AAII numbers have moved to a complete neutral position.  I am more worried about the AAII index because it has been quite volatile over the past few months. 

It is hard for me to be bullish when the underlying fundamentals of the market are very negative (problems in Europe and no earnings growth in the US).

I have serious doubt about additional QE in September as Ben seems content with attempting to talk the market higher.  Eventually that will fail and he will be forced to fall back on having to actually do something.

Be cautious and tighten up your stops as a severe selloff can come without warning.  Risks are weighted more towards the downside than upside.

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