December 10th, 2009 by Prieur du Plessis, Investment Postcards from Cape Town

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The comments below were provided by Kevin Lane of Fusion IQ.

As shown by the chart, the S&P 500 Index still remains in an uptrending wedge (green lines); however, for the last two weeks the index has stalled under a secondary downtrend line (red line # 2). While two weeks of stalling at resistance is not a major concern yet, it does at the very least raise a cautionary note given the fact that the S&P 500 has had such a large, uninterrupted advance.

Weekly momentum as measured by the Relative Strength Index (RSI) has remained neutral while the S&P 500 has rallied. However, until near-term supports are broken near 1,050 and then 1,026 it is hard to get too negative.

So, to reiterate, some yellow lights are flashing but the bottom line is the trend is still up and remains intact and only a move below the 1,050 and then 1,026 level will be viewed as a negative.

From a portfolio management perspective we would tighten up stops on profitable positions and reduce (or hedge) long-side exposure if the above-mentioned levels are violated.

Source: Kevin Lane, Fusion IQ, December 09, 2009.

Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.

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