I was shocked to find a beautiful channel on the SPX daily chart
last night that encompasses the entire rally since March 2009, with the
top and bottom trendlines traced from the November 2008 and March 2009
lows respectively.
It has only become obvious with the recent low at 1044, as that provided the second touch to define the lower channel trendline:
I was shocked because I thought that the SPX had broken all key
uptrend support trendlines, and it is now clear that just isn't the
case. The uptrend channel is still intact.
On the plus side we now have a very powerful indicator for when this
uptrend does finish, as confirmation will come with a break with
confidence of the lower trendline. In the interim the centre trendline
should provide significant resistance in the event that another
substantial wave up gets going. I couldn't help noticing that by the
time we would reach it in the 1180 – 1200 area, it would be in the
region the potential IHS on SPX is indicating to.
Not a cheery read for bears I know.
On the other hand all channels do break, and this one could break
soon. it is a rising channel and a retest of 1044 would more than
accomplish that now.
I do have something more cheering for bears to read as we are coming
up to the pivot cycle date for my version of Joe8888's 40 day pivot
cycle. My (slightly modified) version runs 41 days with the 42nd day
not counted, and on my chart the 41st day is next Monday 7th March.
Unless we have a major selloff between now and then, this should be a
pivot high like the last one in early January:
In the very short term we almost made it on Tuesday to my next upswing
resistance line at the broken blue dotted trendline on the top SPX
chart. I'm not expecting that resistance line to be broken before the
next swing down, but we could spend a few days testing that (rising)
trendline before the next swing down begins.
