S&P 500 Index (SPY) Trend Status Neutral

click for larger chart

Source: FusionIQ

>

Kevin Lane, CIO of Fusion analytics, observes:

“As seen in the chart above the S&P 500 tested support and bounced from the 1,330 area (lower green line) for the second time in the last six days.

Yesterday’s low also coincides with a rising uptrend line (orange line). That said we believe this is now the critical line that separates a continued extension of the current rally and the start of a spring correction. If this level is violated the trade will turn down for a while and it would be a time to keep the defense on the field for a while and the offense got a breather. For the trade to turn a bit more bullish the S&P would have to get back above the minor downtrend (purple line) near 1,350.”

Category: Markets, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

18 Responses to “S&P500 Update”

  1. Chief Tomahawk says:

    “Loosening up in the bullpen: POMO”

    Hmmm……. seems the teachers, facing Bloomberg’s budget cutting axe, have set Wall St. in their crosshairs:

    http://www.huffingtonpost.com/2011/05/12/wall-street-march-may-12_n_861367.html

  2. machinehead says:

    Since Thursday of last week, the S&P has traced out a head and shoulders pattern, with the pointy little head printing on Tuesday afternoon.

    http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spx&insttype=&freq=7&show=&time=18

    Below 1330, KABOOM! Whacko! etc.

  3. nofoulsontheplayground says:

    I’m surprised you guys use linear charts. Why not semi-log?

    For tells, look at the EEM, which looks like it could be making a H&S top on the weekly. The BSE looks like it is working on a complex H&S top on the weekly. These and the BKX/XLF are great leading indicators for the US markets.

    If these formations do not consolidate and instead break to the norm (down), we could be looking ultimately at a test of the 2010 lows later this year or early next year on the major US and international indices.

  4. DeDude says:

    Does this market want to go down, or does it want to go up?

  5. crunched says:

    Nevermind the fact the ORIGINAL trendline that had been in place since last Summer was broken.

    Other than the tradebots pushing the market around on no volume… can someone please tell me any reason whatsoever to buy the stock market? Growth slowing, QE2 ending… am I missing something?

    ~~~

    BR: I agree with you that trendline breaks are important — but what of the April to June 2010 trend break? The SPX has rallied 34% since then!

  6. Ted Kavadas says:

    Interesting perspective…

    One situation that persists, and I think lacks recognition, is the price action of the Shanghai Stock Exchange Composite Index and its continued divergence with the S&P500. This divergence has been in effect for quite a while now.

    For those interested, my recent post contains a chart illustrating this situation:

    http://economicgreenfield.blogspot.com/2011/05/starting-on-3-2010-i-have-written-posts.html

  7. the COT, here .. http://finviz.com/futures_charts.ashx?t=ES&p=d1

    says it’s the ‘Guppies’ that are in the “Fishbowl” ..

    Fade the Bait.
    ~~

    from http://finance.yahoo.com/q/op?s=SPY&m=2011-08

    yon’ Options are, still, Cheap (Puts) ..

  8. Technical Alchemy says:

    Poor Kevin Lane: you must still believe in Santa Claus and the Easter Bunny. Kevin, please take your orange, red and green Crayola crayons, give them back to your children, and get back to reality. If you’re plotting technical points as per your chart above in your daily profession, then you might as well start practicing voodoo and other hocus-pocus. It’s off-putting and borderline offensive to be conjuring up such generic nonsense.

    Use a volume profile like an adult and hopefully it’ll dawn on you how primitive your charting techniques are. What you posted is purely subjective and exists only in your mind and in those whom don’t have an ounce of independent thought and prefer the herd mentality way of existence.

    Save yourself from further embarrassment; I implore you to at least research the fundamentals of auction market theory. Yes, you will shun all else once you do, yes, you will have that proverbial and revelatory moment when all the stars align for you and you realize all that you’ve been missing. You’re welcome in advance. And please, if you need someone to consult you on such, don’t hesitate to reach out to me.

    crunched: I share your sentiment but the only truth is price. Follow the price action and try to remain as nimble as possible.

  9. Technical Alchemy says:

    Sorry Kevin, I meant orange, green and purple crayon, not red. I know how important your crayons are to you. Please forgive my oversight.

  10. Technical Alchemy

    You should be aware of Mr Lane’s track record and reputation on Wall Street.

    Until you are advising major hedge funds — like he is — you might want to keep your condescending remarks about crayons to yourself

  11. Technical Alchemy says:

    Barry, dear Barry,

    Being an advisor is one thing, being a practitioner is another. I can promise you my book and its returns eclipse’s Lane’s.

    Let’s not go tit for tat on this. Perhaps you should pick up a copy of Mind Over Markets for your own edification as well.

    Have a terrific weekend.

    ~~~

    BR: Its in my wish list, haven’t gotten to it yet

  12. Technical Alchemy says:

    Barry,

    My apologies. Looking back I see now my remarks were crass. But you and I both are very well aware that there is a difference between theory vs practice. Unfortunately I don’t possess a filter like some others and I also don’t refrain from telling it how it is. I’m a straight shooter, flat out speak my mind when it is required of me to do so. I’m all about nature as opposed to nurture, tough love as opposed to coddling.

    I will make the admission and say that there is slight merit to Lane’s approach, because, and only because, it’s based on the theorem of, “this is what I was taught by the media and the masses so I naturally must follow suit”. If the spaghetti lines in his charts work, it is almost exclusively because most people are conditioned to see it from the same perspective thus validating its inept nonsense. Perception is reality, ain’t that right?

    If you care for a primer I’ll extend the same invitation to you as well. I’m based in Manhattan and can easily come out to you one weekend and talk shop if you’d like. I’m not a villain, and could I have rephrased my prior posts I would’ve (I actually did make the attempt but realized there is no option to do so).

    I will be more tactful in response next time. And you have my email in your database should you care to chat anytime.

    TA

  13. Technical Alchemy says:

    Oh, and one last note before I kick-off the weekend; you’re my favorite pundit and I wanted to say thanks for the wealth of information and the stellar rhetoric. Never had the opportunity to do so. You’re a beacon in this otherwise muddled industry.

    See, I can play nice.

    TA

  14. wally says:

    Does four ‘corrections’, each of smaller percent than the last, count for anything? Does it beat a flush or a full house?

  15. machinehead says:

    ‘If the spaghetti lines in his charts work, it is almost exclusively because most people are conditioned to see it from the same perspective thus validating its inept nonsense. Perception is reality, ain’t that right?’

    Quite right. Notoriously aberrant human perception constitutes probably half the price setting mechanism. So if there’s widespread belief in trendlines, double tops and such, they likely will have some influence.

    Don’t get me wrong — I find Edwards and Magee as simplistic as My Weekly Reader. But to the extent that the human visual mechanism is wired to search for patterns, such methods will continue to be used.

    On the other hand, while mightily impressed by Steidlmayer’s original explanation of the volume profile in 1984, in practice I found its interpretation so subjective as to be unusable.

    To each his own.

  16. dead hobo says:

    BR: I agree with you that trendline breaks are important — but what of the April to June 2010 trend break? The SPX has rallied 34% since then!

    reply:
    ———
    Well, it could have happened because the charts caused the market to die and then reanimate

    Or maybe the end of QE1 followed by low liquidity and a flash crash caused investors to step aside until they figured out if the drop was a dip or a dive. Once QE2 was believed to be a certainty, animal spirits returned ant people knew exactly what to expect unless the QE2 announcement was not as expected.

    Yeah, I know, long term chart voodoo is real. (Agree it’s real to true believers, just don’t think the overall markets cares much, although true believers happily cherry pick the self fulfilling prophecies and the occasional coincidence and ignore the rest).

    Me, I still think markets are liquidity driven, but the liquidity must be supported by both positive animal spirits and aggressive HFT. Today, the animal spirits part is going punk and nothing is in the news to invigorate it as of today. Maybe some great news will shout out next week and start a new pump. Short of that, it’s all positioning for the race to the door on 6-30.

  17. dead hobo says:

    Technical Alchemy,

    ‘Mind over markets’ appears o be a day trader text, according to the table of contents. I have no problem with that. In fact, short term analysis is the highest and best use for TA. I use it occasionally as a confirming indicator for spotting bottoms in an active range, but only in very simple context. Long term TA is, to me, comical superstition (as reflected in my numerous comments on the subject).

    Regarding investing; I think medium and long term and would lose if I went outside of my comfort zone. Plus, I appreciate free money and never fret about imaginary money left on the table by taking profits a couple of percent too early. It’s curious how many will comment about leaving money on the table, but let their stops fire at the same or a lower level on the downside and feel professional about it.

  18. Jnavin says:

    May we see Mr. Lane’s chart analysis of XLF or BKX?