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Monday, March 23, 2009

A look at the SPX daily Chart

Lots of stuff going on in this chart. So read all my notes on it. Bottom line is the market is close (I think LOL) to a wave 1 peak. Main point: The 6 month downtrend line from September has been broken along with Primary wave 1 RSI downtrend line. Sooner rather than too much later, these lines are normally backtested as support. (what was once resistance, now becomes support). EWI pointed out the trendline break in their update tonight, but its been something a lot of TA's (edit - actually EWI has the trendline referenced against something else - I like mine better) types have been looking for.

Until the market broke this trendline, I had no confidence in any kind of 38% or more pullback. it just didn't make sense that the market obeys its Primary Wave 1 resistances and goes into a deep correction prior to breaking through and confirming a trend change. Now that the trendlines have been broken, perhaps some distance might be put on them to allow a decent pullback. But not TOO many days, because the longer the market waits to backtesting, the deeper it has to travel to touch them...but the market will do what it needs to do.

Also 804 is now support so that will be tested too sooner or later. Also, the prominent gap at 768.51 -772.31. Thats a nice gap.

Also the "apex" of the previous Intermediate 4th wave triangle is perhaps pointing to a short term top.
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