The S&P 500 daily chart above (click to enlarge) shows the rising trendline that started last March was decisively broken yesterday. There definitely is technical damage and today's reaction to the third quarter GDP numbers should be telling. On the other hand, the series of higher highs and higher lows (one definition of a bull market) is still intact. It would be violated if 1019, the 10/2 low, is decisively broken. Also, the RSI is around the level that prompted strong rebounds in the past.
So, to sum up, some serious cracks in the bull market's armor but not enough to pronounce it dead and buried. We could be at the end of a correction in the bull move or in the early stages of a new bear move. The next few days (starting with today's behavior) will be key.
2 comments:
Excellent observation. The interesting thing is that every time so far this year it has looked like it is about to break down, it has jumped right back up and even higher.
It will be interesting to see if the same will hold this time around. Timing signals can help figure it out by looking into the specifics of multiple stocks and ETFs.
Consider http://invetrics.com
Its daily DJIA index trading signal is up a respectable 68% for the year (as of November 1, 2009) and it is free of charge for individual investors.
We'll know soon enough, michaeld.
I'll check out the web site.
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