Allow me to refresh our minds on a basic premises within Technical Analysis.
If you have been studying technical analysis for longer than a week, you are likely aware of the definition of an uptrend. You know the drill: an uptrend is demonstrated by a series of higher highs and higher lows. This is the basis of technical analysis- the equivalent of knowing what a PE ratio is within fundamental camps. Now lets take it a step further. The basis of a potential break in an uptrend is….wait for it…a discontinuation of high highs and higher lows. Thus, a low that falls below the last low signals a potential break in that uptrend. Should a lower high take place in addition to the lower low, you have the very high likelihood of a break in the uptrend. A bear may be in the works.
Take a look at this weeks S&P chart. What do you see. Hint- I’ve circled an important event for your viewing pleasure.
The last low, as my circled chart indicates, was lower than the prior one.
The market must see a new high that ties out the last high of 1593 pretty soon. Otherwise, the current uptrend is in very real danger.
The coming days and weeks will be telling.
Keith on BNN MarketCall
I’m on “MarketCall Tonight” this Friday May 3rd at 6:00pm. Go to the BNN website to send questions on your followed stocks for the show.