Snp the mother of all equity markets stands on the edge.

Snp the mother of all equity markets stands on the edge.
SNP the large cap based index is most probably heading towards an important support area of 1250 after the uncertainty in the global financial markets increased with EU not able to come to a consensus over the Greece problem and the republican party in US coming out with statements that a temporary technical default by US on its interest payment on bonds would be tolerable.
The SNP has shown a failed inverse head and shoulder pattern which failed to take off after breaking past the resistance and has since then fallen down to what many consider a major support area near 1250.1250 represents the 200 day moving average as well as it is a important support area on the Fibonacci retracement levels. There is this small +ve divergence on the MACD which can offer some solace to battered bulls.
Going forward there can be two scenarios which can play themselves out.
The 1st is the most probable and the best case scenario; The SNP finds a much needed support at 1250 and then bounces back to its resistance levels of 1295 and then remains range bound till US Congress comes up with a suitable solution to its Debt limit problem.
There are positive news regarding US companies earning and other macro-economic data
1. Macy’s US second largest retailer has raised its 2011 profit forecast; similarly INTEL has also raised its profit forecast.
2. Since March 2010 private employers have added 2.4 M jobs which are about 25% of the 8.8 M lost in the recession.
3. Oil has fallen to 94.95$ from 100$ and looks set to test lower levels of 92.50$, this means lower cost for corporation all over the world
4. Housing foreclosure fell yesterday, but the housing market still remains weak.
All these positive news along with technical indicator makes the 1st scenario to be the most probable one.
The 2nd scenario is where the SNP breaks 1250 and 1225 and goes on to test lower levels of 1175 which means a further fall of 6%.
This can happen if Greece defaults on its bond payments and sets off a contagion effect in the Europe which results in a rally in Dollar.
The US Congress fails to come up with a suitable solution to its debt limit problem over the next one month.
The housing market in US shows further weakness and still the fed refuses to come up with QE3 programme.