Let’s take a look at the biggest, oldest, and most important ETF on the planet: the SPY. In particular, there is an ascending channel on the SPY that goes back a full sixteen years (!!!) whose midline is, I believe, quite potent.
Over the course of 2024, the SPY has spent the majority of its time beneath the midline, with a couple of brief exceptions (in the ovals). The relationship of the SPY to the midline is more in the form of resistance, as I’ve emphasized with the arrows below.
Zoomed in this close, one cannot appreciate the longevity of the channel and its midline, but I believe these otherwise invisible levels have power.
Take a few giant steps backward, you can see how, for years now, the SPY has been trapped in the lower half of this multi-decade channel. The midline is crucial resistance, and the times it managed to scramble above it in in 2024 were not long-lived.
Going back for the entirety of this channel, you can fully appreciate how amazing this pattern is, since 99.9% of all the price action has been tidily contained within it, with the extremely brief exception of the nadir of the Covid crash.
In summary, the SPY is very close to its midline right now, which suggests this is a – – how shall I put this? – – suboptimal opportunity to be exchanging cash for shares of stock.
