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SEVEN DAYS AHEAD  Professional trading guides and recommendations for the World's markets 

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

In association with

Market Bulletin 24th March 2011 

The S&P is showing great resilience but has it true bull legs? 

The Technical Trader’s view: 

Nov Dec 2009 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Feb Mar Apr May Ju

650

700

750

800

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900

950

1000

1050

1100

1150

1200

1250

1300

1350

1400

1450

1500

1550

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1650

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38.2%

23.6%

38.2%

50.0%

61.8%

38.2%

61.8%

100.0%

767.50 Prior Low Pivot from 2002

1574 prior All Time High 2003

1216.70 High

S&P 500 Stock Index CME Continuous

 

WEEKLY CHART

The big picture is interesting:

the impetus from the Head

and Shoulders Reversal has

been exhausted.

Though the market has pulled

back from the Fib resistance

at 1347, it has yet been (so

far) lacking in bear energy to

retrace as far as the Prior

High at 1216.70.

(NB the coincident cluster of

Fibonacci supports at that

level)..

Look closer.

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SEVEN DAYS AHEAD  Professional trading guides and recommendations for the World's markets 

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

In association with

18 25 1 8

November

15 22 29 6

December

13 20 27 3

2011

10 18 24 31 7

February

14 22 28 7

March

14 21 28 4

April

10000

20000

30000

40000

50000

60000

70000

1130

1135

1140

1145

1150

1155

1160

1165

1170

1175

1180

1185

1190

1195

1200

12051210

1215

1220

1225

1230

1235

1240

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1305

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1325

1330

1335

1340

13451350

High 1213

1165.70 Low

1167.50 Low

1266.60 High

1289.70 High

1291.60

1290

1337.50 High

1241.50 Low

1216.70 Prior High support from May 2010

S&P 500 Stock Index CME Jun 11

 

DAILY CHART

The market’s resilience has

been impressive given the

background of events.

The rally from the middle of last

week has overcome the first

test of the resistance a the Prior

Low resistance at 1290.

The next test (a lesser one) is

the falling bear trendlineresistance above the market

(1304 today).

Cautious bulls will note the

steeply falling volumes on the

rally, and want to wait for a

move back the 1337.50 Prior

High before becoming

convinced.

The Macro Trader’s view: 

The recent sell-off in the S&P and other leading equity markets in reaction to the

earthquake/natural disaster in Japan and fighting in Libya, appears to have run its course,

since the S&P has rejected the recent lows.

The feared nuclear catastrophe in Japan hasn’t yet materialised. That is despite

• the struggle to bring the badly damaged nuclear generating plant at Fukushima under

control.

• drinking water in Tokyo being declared unsafe for infants to drink due to radiation

contamination

• the logistical nightmare of keeping a city the size of Tokyo supplied with bottled

drinking water

• and the continuing disruption to Japan’s economy.

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SEVEN DAYS AHEAD  Professional trading guides and recommendations for the World's markets 

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

In association with

Equity traders are, it seems, relieved a much worse event hasn’t occurred such as the core of

one or more of the 6 reactors at the Fukushima plant melting down.

In Libya, traders seem relieved the UN authorised no fly zone has stopped Gaddhafi from

attacking his own people, but it has done nothing to restore Libya’s oil exports.

So what has changed sentiment in the S&P over the last few days? Traders have refocused

back onto US fundamentals. The US economy continues to improve as the Fed itself noted asmuch in last week’s FOMC policy statement.

But they also said policy needs to remain loose until the recovery becomes self-sustaining.

Additionally, fiscal policy in the US remains expansionary. So while bond and currency traders

fret that the US public finances are on an unsustainable path, leading to a massive build-up of

the National debt, equity traders take the view, the slack fiscal policy will fuel the economic

recovery.

What is clear is that the world economy has experienced a recession different to other post

WW11 recessions, and the policy responses needed to turn activity around and restore growth,

has also needed to be different.

At the same time the world has changed, and indeed is still changing. The US is no longer the

unrivalled global economic power house; others are competing for that title. The main

contender is China, but India and Brazil aren’t far behind.

This impacts the world economy in two main ways:

- The opportunities for trade are greatly expanded meaning greater opportunity for

prosperity for more of the world’s people, but

- There is greater competition for natural resources, especially energy, namely oil and

this threatens to cause inflationary problems as global activity increases.

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SEVEN DAYS AHEAD  Professional trading guides and recommendations for the World's markets 

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573E-MAIL MSTURDY@SEVENDAYSAHEAD.COM  WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness oraccuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold orheld on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.

In association with

The other area where the world is changing is in the Arab world. Here a people, for so longdominated by powerful rulers, are seeking democracy and a greater say in how their affairs are

managed. While this is great news from a humanist standpoint, there is also a worry that

significant amounts of the world’s oil exports could be interrupted if the protests develop along

the lines of events in Libya.

So while the S&P is supported by domestic US policy, there remains a real threat of volatility

from important external influences. This market looks bullish, but it is likely to suffer from

repeated episodes of risk aversion.

Mark Sturdy 

John Lewis 

Seven Days Ahead