A crucial moment for the S&P500

S&P nearterm

Today I am initiating a new video summary that is embedded in the blog. I hope to have a video add-on to this blog about once a week. Over time, I am sure the videos will evolve – for now, I will touch on a single chart and try to add a bit of colour through the video.

The S&P is forming a right-angled triangle on the daily chart. Triangles can be transitional (i.e. leading into a trend change) or continuation patterns. The only way of identifying whether the pattern will lead into a trend change or a continuation of a trend is to watch for a breakout. A breakout to the upside, which in the S&P’s case will be through 2120, would be bullish. A breakout below around 2080 (which coincides with the 50day MA at around that level) would be bearish. Its hovering around that level as of Wednesdays close (the video’s chart is a day shy of the above chart). In either case, you should adhere to my “3 day rule” (per my book Sideways). That is, wait 3 days or more to determine if a break is real, or a head-fake. Rising volume would be ideal on such a break as confirmation of the breakout – but it’s not absolutely essential.

The current chart shows us that money continues to flow positively into the S&P500- via the rising Accumulation/ Distribution cumulative line at the bottom of the chart. Shorter termed momentum oscillators RSI and Stochastics are meandering – providing no clues to future direction. However, MACD is diverging. MACD diverged against the uptrend in late 2014, and that lead into a fair amount of downward-biased chop.

The bottom line at this juncture is to watch for which way the triangle breaks. That will provide us with the market’s near termed outlook.

5 Comments

  • Congratulations on your new video format Keith. Very beneficial and insightful as always.

    Reply
    • Thanks Bob–this was my first run–I learned a few things that I’d like to change–for example, new videos will be about half the length of this one, and I am going to try to improve the sound and a couple of other tweaks. I think these video’s will be an excellent learning tool for readers.

      Reply
  • At just over 7 minutes, I wouldn’t worry too much about cutting the length in half Keith… It’s just about the length of an average video on Kitco, and most people here enjoy your insights… 3 to 4 minutes would be too short, imo.

    Reply
  • Keith
    It seems to me that your chart is a daily chart but your moving averages are calculating for a weekly chart.
    Isn’t the 200 day sma at 2030?

    Reply
    • By gum, you are correct Bruce! I use weekly’s so often that my default MA is the 40 (week)–s/b changed to 200–which I am going in to do right now–thanks for noting that!!!!

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Never miss another blog post!

Get the SmartBounce blog posts delivered directly to your inbox.

Topics

Topics

Recent Posts

Keith's On Demand Technical Analysis course is now available online

Scroll to Top